South Korea's Semiconductor Exports To China Plunge Amid US Restrictions

South Korea’s semiconductor exports to China fell sharply last month, raising concerns about a slowdown in global demand already impacted by US tariffs. According to the South Korean Trade Ministry, chip sales to China, including Hong Kong, dropped by 31.8% compared to the same period last year. This marks a more significant decline than the 22.5% drop reported in January and follows a surge in semiconductor exports in 2024 that contributed to South Korea’s economic growth.

This downturn coincides with the US tightening its export restrictions on high-tech semiconductors to China. In December, the US Department of Commerce imposed additional curbs on the sale of high-bandwidth memory chips to China, aiming to curb Beijing’s progress in fields like artificial intelligence and advanced technology.

Notably, SK Hynix Inc. and Samsung Electronics Co., two of the world’s largest memory chip manufacturers, both operate semiconductor plants in China. As of 2024, China accounted for approximately 40% of South Korea’s total technology exports. However, the flow of chips to China has slowed due to various factors affecting South Korea’s vital trade sector.

South Korea’s total semiconductor exports fell by 3% in February year-on-year, according to government data. The decline is attributed to falling prices for conventional memory chips and ongoing shifts in semiconductor production technologies, as stated in a report released by the ministry on Sunday.

This drop in semiconductor exports presents a growing challenge for South Korea’s economy, which is expected to lose momentum compared to last year. The weakening trade performance is compounded by US tariffs under President Donald Trump’s administration and sluggish domestic private spending. Additionally, South Korea continues to recover from the economic disruption caused by the brief martial law declaration in December by President Yoon Suk Yeol.