South Korea’s semiconductor exports to China fell by nearly one-third in the first two months of the year after new US export controls took effect.

Chip exports from South Korea to China fell by 31.8 percent year-on-year to nearly $4 billion (£3.08bn), following a 22.5 percent decline to $5.6bn in January, according to figures from South Korea’s Ministry of Trade, Industry and Energy.

The decline was caused largely by new US restrictions imposed in December that affect high-bandwidth memory (HBM) chips shipped to China.

Trade restrictions

The restrictions are part of an ongoing effort to block China from progressing in the artificial intelligence industry.

HBM chips are often used with AI accelerators to deploy AI capabilities in data centres.

South Korea’s SK Hynix and Samsung dominate the HBM market.

Increased exports to other countries mostly made up for the decline in China shipments, with total chip sales from South Korea down 3 percent year-on-year in February, South Korean government data said.

China received about two-fifths of South Korea’s technology exports as of the end of 2024.

The government body said exports were also slowed by declining prices for conventional memory and a technological transition in chip production.

In January SK Hynix said demand for HBM and high-density server chips continued to rise as companies invest in AI infrastructure, after the company’s revenues doubled last year.

Tariff threat

South Korea’s economic momentum is expected to slow this year amidst new tech trade restrictions from the US as well as tariffs threatened on many fronts by the new US administration.

South Korea’s trade minister may meet with counterparts in Japan and China in Seoul later this month in what would be the ministers’ first meeting since one in Beijing in 2019 to discuss US tariffs and economic cooperation, local Japanese media reported on Friday.