AI chip boom lifts South Korea and Taiwan exports ahead of Japan

2026-08-07

South Korea and Taiwan's exports in the January-June period topped Japan's for the first time. Fueled by surging demand for semiconductors used in artificial intelligence, the two economies expanded sharply, while Japan, despite its strengths in semiconductor-related materials and manufacturing equipment, saw only limited benefit. The shift underscores Japan's lag in supplying the finished products in demand around the world.

Integrated circuits lead the way

Trade data for Japan, South Korea and Taiwan were combined with figures from the Japan External Trade Organization, or JETRO, and the United Nations database UN Comtrade to analyze category-by-category trends in dollar terms. Mitsubishi UFJ Research and Consulting helped with the analysis.

As a result, Japan's exports in the January-June period totaled $384.4 billion, below South Korea's $496.3 billion and Taiwan's $416.6 billion. Japan posted a rise of just under 10% from a year earlier, while South Korea and Taiwan each recorded gains of nearly 50%.

Behind the increase was the explosive growth in demand for AI semiconductors. Taiwan Semiconductor Manufacturing Co. (TSMC) in Taiwan and Samsung Electronics and SK Hynix in South Korea are responsible for production of advanced semiconductors.

In the first half of 2026, integrated circuit exports reached $149 billion in South Korea and $133.2 billion in Taiwan. In both countries, they accounted for around 30% of total exports. South Korea exceeded its full-year 2025 result in just the first half of 2026. Japan's figure was $21.2 billion, accounting for only about 5% of total exports.

Strong in equipment exports

Japan remains competitive in semiconductor manufacturing equipment and materials. Tokyo Electron, Advantest and Lasertec, among others, hold large shares in global markets and have captured AI demand through capacity expansion across countries and regions.

Japan's semiconductor manufacturing equipment exports in the first half of 2026 totaled $15 billion, above South Korea's $5.2 billion and Taiwan's $3.5 billion. Even so, the gap with South Korea and Taiwan, which make high value-added advanced semiconductors in a market that is expanding rapidly, did not narrow.

Kenta Maruyama of Mitsubishi UFJ Research and Consulting said that even when countries and regions are boosting semiconductor exports, exports of components and equipment are not likely to surge rapidly.

Structural stagnation

Japan's historically weak yen has recently weighed on its export value when converted into dollars. But the South Korean won and Taiwan dollar have also been on a somewhat softer trend against the greenback, so exchange rates alone cannot explain the divergence. Nor can it be dismissed as a special case limited to the AI boom.

Japan's export volume index, excluding the effects of price moves, has been roughly flat in recent years after peaking before the Lehman shock. According to JETRO, Japan fell to sixth place globally in export value in 2025. In the 1970s through 1990s, it ranked third after the United States and Germany, including West Germany. In the 2000s it slipped to fourth as China rose, and in recent years it has also been overtaken by the Netherlands and Hong Kong.

Since the postwar recovery period, Japan has developed as a trade-led industrial nation, supplying products in growing global demand across textiles, steel, automobiles and electronics. But the decline of Made in Japan has long been pointed out.

South Korea and Taiwan, which caught the wave of an era in which major tech companies compete to develop advanced AI, have reaped substantial rewards. Unless Japan can draw up a new growth model suited to the digital age, it risks falling further behind in both manufacturing and services.

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