South Korea turns a record export surge into chips, data centres and reshoring

The Gumi AI Data Center will occupy a 498,165 sq ft site in Gongdan-dong, Gumi-Si. Samsung SDS is building it in phases, from 60MW to 120MW, with completion expected in late 2028.

The project sits inside a much larger corporate commitment. Samsung has pledged 60 trillion won to turn the Yeongnam region into what it calls a Global Physical AI Innovation Cluster. Samsung SDS, the group's IT and cloud unit, announced a 427.3 billion won ($318 million) initial investment in the Gumi facility last January. It also signed a memorandum of understanding with North Gyeongsang Province and Gumi City. The site is meant to host in-house GPUs and a colocation business for other companies' hardware.

President Lee Jae Myung presented a 2027 budget of 820.9 trillion won ($610.14 billion) to the National Assembly on Monday, a 12.8% increase.

Of that, 21.3 trillion won goes to semiconductors, physical AI and AI data centres, nearly double the 2026 level. A separate 4.7 trillion won is earmarked for a sovereign AI model that Lee described as having the "world's highest performance". The plan also funds training for 2,000 specialists in semiconductor design. Lee told the assembly the extra spending would produce "virtually no net increase in government debt," with newly issued bonds used to repay existing debt.

The export numbers the plan rests on

October exports rose 93.7% from a year earlier to $115.28 billion, the fastest growth since January 1974, according to trade ministry data.

The composition matters more than the headline. Semiconductor exports jumped 259.4% to $56.44 billion, computer exports 496.6% to $5.85 billion and electrical equipment 74% to $1.99 billion, Global Times reported, citing the October release. Chips alone therefore accounted for roughly half of everything the country shipped. The ministry attributed the surge to sustained AI infrastructure investment by global technology companies. It also flagged a calendar effect: differences in the timing of the Chuseok holiday gave October more working days than a year earlier. Imports rose 36% to $72.78 billion, the strongest since January 2022, and the monthly trade surplus narrowed to $42.50 billion from September's record $49.97 billion. Exports reached $930 billion in the first 10 months of 2026, past $900 billion for the first time, and Lee said $1 trillion a year was within reach. For scale, South Korea exported about $709.3 billion in the whole of 2025.

The leak in the export machine

Not all of that memory leaves through customs declarations that Washington or Seoul would recognise. A memory smuggler described to The Information, in an account relayed by Tom's Hardware on 3 November, how he moves export-controlled HBM from South Korea into China.

The method exploits how the rules are written. His chip design firm builds cheap, low-performance server processors that fall under US and South Korean export controls. Those boards are paired with expensive HBM from Samsung and SK hynix, memory that is banned for export to China on its own. Because the controls look at processor performance and not at the memory attached to it, the boards pass as legal exports. They land in Hong Kong, cross into Shenzhen in commuters' luggage, and end up in workshops where technicians heat the solder to lift the memory chips.

An HBM3E unit that changed hands in China for several hundred dollars a year ago now sells for about $4,000, a Shenzhen-based chip broker told The Information. An AI chip needs six to eight of them. That puts $24,000 to $32,000 of memory into every card. Seoul Economic Daily reported on 3 November that the stripped memory is bound for Huawei.

Competition is building underneath all this. SCMP reported on 26 October that South Korea was urged to guard chip profitability as China's CXMT and YMTC gain market share.

Rates, the won and the spillover test

The budget assumes export earnings reach the domestic economy. Bank of America thinks they partly will.

It said domestic spillovers and positive output gaps add to inflation pressure in South Korea and Taiwan, supporting further rate hikes, while softer demand in China warrants easing. The Bank of Korea is not there yet. It held rates at 3% in October while assessing two earlier increases, citing uncertainty about "the degree of expansion in the semiconductor sector and its spillover onto domestic demand". Currency markets are also unconvinced. The won weakened 0.71% to 1,343.09 against the dollar on Monday despite the export surge. BofA put year-to-date export growth at 57% in South Korea, 44% in Taiwan and 21% in China, and expects Taiwan to see the larger domestic spillover.

What happens next

Policy is being bent toward the same goal. Revised rules widening who qualifies as a U-turn reshoring company take effect on 23 November, after Cabinet approval on 3 November, Chosunbiz reported. Companies that invest in a domestic mother factory can now keep their overseas plants and still qualify. Firms that set up an in-house research institute in Korea can also be recognised as reshoring.

The physical build-out has its own constraints. The Gumi data centre will use hybrid cooling: air for networking and storage areas, liquid for high-density GPU racks. Samsung SDS will run five South Korean data centres once it is finished.

What the government has not said is how much of the 21.3 trillion won is new money. Nor have Samsung or SK hynix disclosed what the smuggling route costs them.