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Overall exports soar thanks to chips and cars, but steel and machinery are falling further behind

Published: 16 Jan. 2026, 15:45 Updated: 18 Jan. 2026, 17:06

Containers ready for export are piled up at a port in Pyeongtaek, Gyeonggi, on Jan. 14. [YONHAP]

Korea’s exports surpassed $700 billion for the first time, marking a major milestone — but a report analyzing the past seven years of international trade has revealed growing disparities in competitiveness between export categories.

While the country saw gains in semiconductors and automobiles, its competitiveness in steel and machinery declined, raising concerns over a polarization of export sectors.

“Despite the headline growth in Korea’s exports, the country’s share in the global export market has been on the decline since 2018,” the Bank of Korea (BOK) said in a report titled “Assessment of Export Competitiveness by Key Items” (translated). “Excluding a few items like semiconductors, growth has largely stagnated.”

The report analyzed trends in export competitiveness by item from 2018 to 2024. It assessed Korea’s relative competitiveness — by product and market — while accounting for short-term, less controllable factors such as the economic conditions of importing countries and global demand.

The analysis showed a decline in Korea’s export competitiveness in steel and machinery products. The competitiveness of Korean steel has weakened since the mid-2010s, as China has ramped up its production capacity and undercut Korean prices.

Vehicles made for export are parked at a port in Pyeongtaek, Gyeonggi on Jan. 14. [YONHAP]

China’s steel exports also surged amid its real estate downturn triggered by the Evergrande crisis in 2021, when the Evergrande Group, a massive property developer, defaulted billions in debt, further squeezing Korea’s market share.

Korean machinery has also lost ground to Chinese products in markets such as Southeast Asia. Chinese machinery, which is cheaper, has improved in quality thanks to state-backed initiatives like “Made in China 2025.”

“The European Union’s full implementation of the Carbon Border Adjustment Mechanism this year is expected to raise trade costs and further weaken Korea’s competitiveness in the European market,” the BOK said.

“Until recently, Korea had higher market competitiveness in steel compared to countries like Italy and the Netherlands,” the central bank continued in its report. “But increased costs associated with carbon emission permits could narrow Korea’s position in the EU.”

In contrast, the competitiveness of Korea’s semiconductor and automobile exports improved. Domestic chipmakers were quick to develop and commercialize high-value products such as high bandwidth memory (HBM) and double data rate 5 synchronous dynamic random-access memory (DDR5 SDRAM), giving them an edge.

“With distinctive technology, Korean companies achieved mass production of cutting-edge memory chips about a year ahead of competitors, maintaining a significant technological lead while reducing defect rates,” the BOK report noted.

However, Korea’s market competitiveness in semiconductors has declined somewhat since 2022, particularly in China and Southeast Asia, as Chinese firms expanded memory chip production and replaced Korean exports, particularly in commoditized products.

Construction is underway at a site in Yongin, Gyeonggi for a semiconductor cluster on Jan. 9. [NEWS1]

Automobiles, including both internal combustion engine cars and electric vehicles, also saw gains in competitiveness. The launch of premium brands in the late 2010s improved product quality, while electric vehicle platform development from 2022 to 2024 further boosted Korea’s position.

“Exports of hybrid vehicles have performed better than in the past, though not significantly better than competitors,” the BOK noted, suggesting the growth is more likely tied to rising global demand.

While global demand certainly plays a role, Korea’s long-term export market share ultimately depends on enhancing item-level competitiveness.

“To regain ground in weaker areas like steel, Korea must boost product competitiveness through technological upgrades and productivity improvements,” the central bank said. “In semiconductors and automobiles, Korea should maintain its lead through pre-emptive responses to global demand shifts, supported by research and development investment and stronger tech security. The government's proactive trade and diplomatic policies are also essential.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY KIM SEON-MI [[email protected]]