Semiconductors subvert the trade pattern, Taiwan and South Korea's export rankings make a huge leap forward, overtaking Japan

South Korea's Chosun Ilbo reported that the semiconductor super cycle driven by artificial intelligence (AI) has completely reshaped the global trade pattern in just one year. Taiwan and South Korea are the biggest beneficiaries. In the first half of this year, their export rankings have improved significantly compared with last year, ranking the fifth and sixth largest exporters in the world respectively, ahead of Japan, which ranks ninth.

Chosun Ilbo and the Korea Trade-Investment Promotion Agency (KOTRA) analyzed statistics from the World Trade Organization (WTO) and major trading countries and found that in the first half of this year, the rankings of fifth to tenth among the world's top 10 exporting countries were reshuffled. This can be called the most dramatic change since China surpassed Germany to become the world's largest exporter during the 2009 global financial crisis.

South Korea's exports are expected to exceed US$1 trillion for the first time this year, of which semiconductor exports are expected to reach US$400 billion. In the first half of this year, South Korea's export volume was US$496.1 billion, a 48.2% increase from the same period last year. Its global ranking rose from seventh to fifth, not only surpassing the "insurmountable rival" Japan, but also approaching the world's fourth-ranked Netherlands (US$531.5 billion).

South Korea's memory exports have also pushed up the ranking of trading partners through the global supply chain. Taiwan, which imports high-bandwidth memory (HBM) from South Korea to assemble into AI accelerators, saw an annual export increase of 46.1% in the first half of this year, and its ranking jumped from 11th to 6th in the world. Mexico, which assembles Asian semiconductor components into servers and exports them to the United States, saw its exports increase by 24.6% year-on-year, and its ranking rose from 10th to 8th. Singapore's exports of semiconductor back-end manufacturing and intermediary centers increased by 38.1% year-on-year, and its ranking rose from 13th to 10th.

Germany, which ranks third in global exports, maintains the same ranking, while Japan, a traditional manufacturing powerhouse, dropped from fifth to ninth last year.

Semiconductors are reshaping global trade power. South Korea's semiconductor exports exceeded the US$60 billion threshold for the first time last month, equivalent to Japan's average monthly export total this year (US$64.7 billion). In other words, semiconductor exports alone can rival Japan’s overall exports.

Explosive semiconductor exports are changing the global trade landscape. Last year, Japan was the fifth largest exporter in the world, behind China, the United States, Germany and the Netherlands. Italy, which ranked sixth, was also far behind South Korea. Just one year later, the top 10 exporters in the world were China, the United States, Germany, the Netherlands, South Korea, Taiwan, Italy, Mexico, Japan and Singapore.