An engineer walks inside a laboratory of Taiwan Semiconductor Research Institute at a Science park in Hsinchu county, Taiwan. Photo by RITCHIE B. TONGO/ EPA
July 27 (Asia Today) — Growing artificial intelligence demand and stronger trade barriers are rapidly reshaping the production and supply chains of South Korea’s major manufacturing industries, the Bank of Korea said Monday.
The central bank said Taiwan has become South Korea’s second-largest semiconductor export destination as the AI supply chain draws Korean memory-chip producers closer to Taiwanese manufacturers.
Meanwhile, South Korean automakers are increasing production in the United States and expanding hybrid vehicle exports as tariffs and U.S. industrial policies make direct exports less competitive.
The findings were included in the Bank of Korea’s Map of Production and Supply Chains for South Korea’s Major Manufacturing Industries. The report used data from 2024 and 2025 to examine 11 industries, including semiconductors, automobiles, steel, shipbuilding and petrochemicals.
South Korean semiconductor exports to Taiwan nearly tripled from $12.78 billion in 2022 to $36.77 billion in 2025.
Taiwan’s share of South Korea’s semiconductor exports increased from 9% to 19.9%, moving it from the fourth-largest export destination to the second largest.
China remained the largest destination, but its share fell from 53.1% in 2022 to 40.3% in 2025.
The central bank attributed the change to a shift in demand from conventional dynamic random-access memory chips to graphics processing units and high-bandwidth memory used in AI systems.
The AI semiconductor supply chain generally involves U.S.-based Nvidia designing graphics processors, Taiwan Semiconductor Manufacturing Co. producing and packaging the chips and Samsung Electronics and SK hynix supplying high-bandwidth memory.
That structure has increased the volume of South Korean semiconductor products shipped to Taiwan.
Semiconductors have also become more important to South Korea’s overall manufacturing sector.
Domestic semiconductor production rose from 74 trillion won in 2014 to 210.8 trillion won in 2024 ($50.4 billion to $143.6 billion). Its share of total manufacturing production doubled from 5% to 10.1% during the same period.
Production remains heavily concentrated in the greater Seoul area, which accounted for 82.3% of the national total. The Chungcheong region accounted for another 14.7%.
Major facilities in the Seoul metropolitan region include Samsung Electronics plants in Hwaseong, Pyeongtaek and Giheung and SK hynix’s plant in Icheon.
China’s growing influence was most apparent in South Korea’s automobile import market.
The share of vehicle imports from China increased from 3.5% in 2022 to 37.2% in 2025. Chinese-made vehicles accounted for about 70% of South Korea’s electric vehicle imports by value in 2025.
The report attributed the increase to China’s price competitiveness and its extensive supply chain covering vehicles, batteries and components.
The United States remained South Korea’s largest automobile export market in 2025. Shipments were valued at $30.15 billion and accounted for 41.9% of total finished-vehicle exports.
However, the United States’ share of South Korea’s electric vehicle exports fell from 33.6% in 2022 to 5.2% in 2025.
The central bank said U.S. subsidies, local production requirements and tariff barriers had weakened the competitiveness of electric vehicles manufactured in South Korea and shipped directly to the United States.
South Korean automakers have responded by expanding U.S. factory operations while increasing exports of hybrid vehicles.
Hybrids’ share of South Korea’s finished-vehicle exports rose from 11.6% in 2022 to 20.4% in 2025.
The shift reflects automakers’ efforts to respond to slowing electric vehicle demand and insufficient charging infrastructure by offering vehicles that combine electric motors with internal combustion engines.
— Reported by Asia Today; translated by UPI
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Original Korean report: https://www.asiatoday.co.kr/kn/view.php?key=20260727010009651