South Korea Posts Surplus on China Chip Demand

SCMP and TrendForce report that South Korea has moved from a trade deficit with China to a surplus this year. According to South Korea's Ministry of Trade, Industry and Resources, the bilateral balance moved from a US$764 million deficit in December 2025 to a US$1.1 billion surplus in February and expanded to US$3.8 billion in May (SCMP; TrendForce). The ministry's data show semiconductor exports to China rose 243% year on year in May (SCMP; TrendForce).

Industry research cited by SCMP and TrendForce links the swing to booming memory demand tied to AI infrastructure buildout in China. Morgan Stanley data cited by SCMP report dramatic contract-price moves, with 16GB DDR5 prices up 682% and NAND flash up 807%. TrendForce reports that conventional DRAM contract prices climbed about 93% to 98% quarter on quarter in 1Q26, and that Chinese suppliers such as CXMT and Huawei's Ascend CPU family have been influencing local procurement patterns (TrendForce; SCMP).

Editorial analysis: Companies and markets that supply memory chips are especially sensitive to short, sharp demand shocks because memory production cycles and capacity expansion lag sudden demand. Observed patterns in similar cycles show that rapid price increases and export surges often narrow gross margins for buyers, prompt inventory restocking, and attract competitive entry from local suppliers. Public coverage contrasts South Korea's current surplus with deteriorating positions for other regional exporters: SCMP cites Capital Economics on Japan's weaker export volumes to China and notes Taiwan's shift toward a trade deficit amid redirected shipments to the United States (SCMP; TrendForce).

Industry observers should track the following indicators to assess persistence:

• •Chinese memory capacity additions and investment by local makers such as CXMT;
• •contract-price trajectories for DRAM and NAND from Morgan Stanley and market intelligence firms;
• •shifts in procurement by major Chinese cloud and AI firms, including any continued adoption of alternatives to imported AI accelerators (TrendForce).

Editorial analysis: For practitioners, the episode underscores that supply-chain positioning in memory markets can quickly change trade balances and vendor leverage. Firms operating AI infrastructure procurement or hardware supply chains will watch price volatility, capacity announcements, and the pace at which Chinese domestic suppliers scale production.