South Korea replaced Japan as the largest trade deficit country for Taiwan in the first 10 months of this year, with Seoul the main supplier of electronic components to Taipei’s artificial intelligence (AI) developers, the Ministry of Finance said on Thursday last week.
During the January-to-October period, Taiwan’s trade deficit with South Korea rose to US$18.1 billion, surpassing the US$10.2 billion deficit for all of last year and topping the US$16.7 billion deficit with Japan, the ministry said.
The ministry said the deficit with South Korea has been rising because the country supplies a large volume of DRAM chips to Taiwan’s AI-related goods producers, while Taiwan and South Korea are close partners in the global supply chain, it added.
Photo: EPA-EFE / YONHAP
Recently, South Korea-based SK Hynix Inc, the second-largest DRAM brand in the world, said it would work with Taiwan Semiconductor Manufacturing Co (台積電) to develop the next generation of high bandwidth memory chips, with both companies supplying US-based AI chip designer Nvidia Corp.
ICs were the largest category of exports from South Korea to Taiwan in the 10-month period, with a value of US$23.6 billion, ahead of oil refinery items at US$1.1 billion, cyclic hydrocarbon at US$900 million, computer components at US$900 million and semiconductor production equipment at US$600 million, the ministry said.
Over the period, ICs were the largest source of Taiwan’s trade deficit with South Korea with a value of US$12.9 billion, accounting for about 71.3 percent of Taiwan’s total trade deficit ahead of oil refinery items at US$800 million and computer components at US$700 million, it said.
Taiwan sold US$16.8 billion of goods to South Korea in the 10 month period and bought US$34.9 billion worth of South Korean-made merchandise.
South Korea was the fifth-largest export market for Taiwan, trailing China and Hong Kong, the US, Japan, and Singapore, but the fourth-largest supplier to Taiwan following China and Hong Kong, the US, and Japan.