South Korea’s semiconductor and automotive industries, the two mainstays of the nation’s economy, saw record performances from its leading companies in the second quarter of this year. SK Hynix and Hyundai Motor Company reported record quarterly sales on July 25. SK Hynix, the world’s second-largest memory chipmaker, posted sales of 16.42 trillion won ($11.8 billion), while Hyundai Motor recorded 45.2 trillion won in sales.
SK Hynix said it reported an operating profit of 5.46 trillion won in the three months to June, marking the third consecutive profitable quarter. Hyundai Motor’s operating profit reached a record 4.27 trillion won, the highest in the carmaker’s history.
Until last year, the South Korean economy was largely sustained by the automotive industry, led by Hyundai and Kia, as the global semiconductor downturn dragged on for over two years. The situation is different this year. The automotive sector continues to show robust growth, and the semiconductor industry has rebounded in the first half of the year, restoring the so-called “twin pillars” that drive the Korean economy.
The question is whether the growth momentum fueled by the semiconductor and automotive sectors can spread to the broader economy. There are signs of decoupling, where strong exports fail to boost domestic consumption. South Korea’s gross domestic product (GDP) contracted 0.2% in the second quarter compared with the previous quarter, the Bank of Korea said on July 25. GDP growth shrank for the first time since the fourth quarter of 2022, which saw the economy contracting 0.5% quarter-on-quarter.
Consumption growth turned negative in the second quarter, falling by 0.2% from the previous quarter, a sign that export growth is not translating to increased household incomes and consumer spending.
