Due to a sharp decline in demand for petroleum products and smartphones, South Korea's export growth slowed in the first 20 days of October.

On Monday, October 21, the Korea Customs Service announced the export data for the first 20 days of October, with the adjusted export value showing a slight increase of 1% compared to the same period last year. In contrast, the total export value for the entire month of September, previously announced, increased by 7.5% year-on-year.

The unadjusted export data showed a decrease of 2.9%, while overall imports decreased by 10.1%, leading to a trade deficit of up to 1 billion US dollars. Specifically, semiconductor exports remained steady, while there was a significant decline in the sales of petroleum products and wireless communications equipment.

Exports of petroleum products plummeted by 40% year-on-year, exports of wireless communications equipment dropped by 21.7%, and semiconductor exports grew by 36.1%.

South Korea has one of the world's largest oil refining industry clusters, operated by companies such as SK Innovation, S-Oil, and GS Caltex. The country heavily relies on imports to meet its energy needs but also exports refined oil to drive economic growth, making it vulnerable to global oil price fluctuations.

In addition, being the home to two of the world's largest storage chip manufacturers, South Korea has also seized the opportunity of AI advancements this year by exporting advanced semiconductors to the USA and other developed economies.

However, in recent weeks, there have been doubts about whether the momentum of chip sales has peaked. Data shows that South Korea's semiconductor export growth has been slowing for several months. At the same time, the price growth of memory chip shipments in September has also moderated.

According to official data released earlier, South Korea's semiconductor exports in September were $13.63 billion, reaching a historical high. Among them, the export volume of memory semiconductors surged by 60.7% year-on-year to $8.72 billion; while system semiconductors grew by 5.2% to $4.37 billion.

However, analysts believe that this does not mean that South Korea's policy makers will immediately change their outlook on chip exports. In the past, demand has remained robust even after reaching its peak, supporting economic growth. Data from Monday shows that demand for memory chips is still strong, which may help offset the negative impact of declining sales of other products.

It is worth noting that earlier this year, the Bank of Korea predicted that the chip boom would continue until 2025, with economic growth possibly reaching around 2.5%, faster than last year.

Prior to the release of the data, Nomura Holdings economist Jeong Woo Park stated in a report:

"Although export growth seems to have peaked and is ready to decline, our calculations on the export cycle show that exports are transitioning from the recovery phase to the expansion phase. We expect semiconductor exports to maintain a double-digit growth rate and drive mid-term expansion throughout 2025."

Meanwhile, economists Benson Wu and Ting Him Ho of Bank of America warned, "The potential rise in trade barriers and U.S. self-sufficiency may reduce overall demand for South Korean commodities."