South Korea becomes No. 1 trade deficit country for Taiwan

Taipei, Nov. 22 (CNA) 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 developers, according to the Ministry of Finance (MOF).

In a statement released Thursday, the MOF cited data it compiled showing that Taiwan's trade deficit with South Korea rose to US$18.1 billion from January to October, topping the US$US$16.7 billion deficit with Japan.

The trade deficit with South Korea in the 10-month period even surpassed the US$10.2 billion deficit for all 2023, the data showed.

Taiwan has recorded a trade deficit with South Korea for over a decade and with the current AI era boom, the deficit has been rising because of its important role in the global AI supply chain, the MOF said.

As South Korea leads the world in global dynamic random access memory (DRAM) chip production, the country supplies a large volume of DRAM chips to Taiwan's AI-related goods producers, the ministry added.

Taiwan and South Korea are close partners in the global supply chain, the MOF said.

Recently, South Korea-based SK Hynix Inc., the second largest DRAM brand in the world, said it would work with Taiwan Semiconductor Manufacturing Co. to develop the next generation of high bandwidth memory (HBM) chips, with both companies supplying U.S.-based AI chip designer Nvidia Corp.

Integrated circuits (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 (US$1.1 billion), cyclic hydrocarbon (US$900 million), computer components (US$900 million), and semiconductor production equipment (US$600 million), according to the MOF.

During the same 10 month period, integrated circuits 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 (US$800 million) and computer components (US$700 million), the MOF said.

Taiwan sold US$16.8 billion worth 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 United States, Japan and Singapore, but the fourth largest supplier to Taiwan following China and Hong Kong, the U.S. and Japan.