Republic of Korea reshapes role in global trade amid record exports: QNB

Doha, Qatar: Republic of Korea has shown remarkable flexibility in adjusting to global trade changes, as highlighted in Qatar National Bank's (QNB) latest report. The country is broadening its trade ties, particularly in Southeast Asia, while its expanding defense sector is generating new income and enhancing its global standing.

In June, Republic of Korea's exports topped $100 billion for the first time, a 70.9% increase from the previous year. This surge was primarily fueled by semiconductor shipments and solid-state drives used for data storage. Information and communications technology exports now make up more than half of the nation's total exports for the first time, with the country's overall exports reaching a record $709.7 billion in 2023.

This growth is largely attributed to the soaring demand for memory chips utilized in artificial intelligence applications, a sector where South Korea is a major global supplier. However, QNB cautions that shifting trade ties with China, efforts to minimize economic interdependence, and fierce competition in the memory chip market present significant hurdles.

The nation faces a critical decision: should it continue as an export-focused chip supplier or strive to become a more influential force in shaping global supply chains for key industries, especially artificial intelligence and technology? QNB suggests Seoul is aiming for both objectives, with Samsung Electronics and SK Hynix controlling about 73% of the global market for high-bandwidth memory chips.

While this dominance brings revenue streams, it also leaves South Korea susceptible to global trade shocks and mounting competition. Notably, the country's trade surplus with China has declined from nearly $100 billion in 2018 to $20 billion last year, as Beijing bolsters domestic substitutes in electronics, electric vehicles, and batteries.

In response, Seoul has reinforced its partnership with Washington under a landmark trade and security agreement in early 2026. This pact has led to a reduction in US tariffs on South Korean goods from 25% to 15%, alongside a $350 billion investment from the US, including $150 billion for the American shipbuilding industry. The agreement also supports Seoul's plans to develop nuclear-powered submarines, crucial for its long-term security.

Despite these advancements, Republic of Korea is also expanding its defense exports and exploring new markets in Southeast Asia, where Korean firms have established extensive manufacturing facilities and are deeply embedded in regional supply chains. However, trade tensions persist, with the United States currently investigating South Korean manufacturing practices, indicating ongoing challenges in the bilateral relationship.