[News] South Korea Becomes Taiwan’s Largest Trade Deficit Due to NVIDIA AI Supply Chain

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According to a report from Central News Agency, citing statistics from Taiwan’s Ministry of Finance, South Korea has surpassed Japan to become Taiwan’s largest source of trade deficit in the first 10 months of this year, with a trade deficit of USD 18.1 billion, setting a new record ahead of previous full-year totals.

The report highlights that the largest contributor to this deficit is integrated circuits, mainly because Taiwan and South Korea are key suppliers for international giants like NVIDIA, with South Korea supplying large amounts of DRAM to Taiwanese firms for packaging and integration.

As per the statistics cited in the report, integrated circuits account for a deficit of USD 12.9 billion, approximately 71.3% of the total trade deficit. The main factor behind this is South Korea’s competitive advantage in memory products and its key role as a supplier in the AI boom.

As supply chain partners of AI chip leader NVIDIA, South Korea’s SK hynix, the world’s second-largest memory chip manufacturer, has previously announced its collaboration with Taiwan’s semiconductor giant TSMC to produce next-generation HBM chips for AI technology, according to the report.

The report points out that the trade between Taiwan and South Korea has been active. According to the statistics provided by the Ministry of Finance, South Korea is Taiwan’s fifth-largest export market, following China and Hong Kong, the U.S., Japan, and Singapore. At the same time, South Korea ranks as Taiwan’s fourth-largest import source, following China and Hong Kong, the U.S., and Japan.

Taiwan has long experienced a trade deficit with South Korea (where import values exceed export values), and recent AI supply chain collaborations have further boosted interactions between the two, as the report highlights.

The report further notes that Taiwan and South Korea are both export-oriented economies with similar industrial structures. The main imports and exports between the two countries largely overlap, with electronic products being the dominant category.

Read more

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(Photo credit: NVIDIA)