Latent EquityChip output vs Korea chip exports
Our read: the chip boom looks more like a price boom than a volume boom.
South Korea's chip exports were worth $60.30bn in September, 3.6x a year earlier, per its trade ministry (MOTIE). US output of semiconductors and electronic components, which the Fed measures as volume rather than dollars, was 1.2x a year earlier (up 19.9%, our calc on Fed industrial production data released Oct 16).
Dollars up 3.6x and units up 1.2x leaves a gap of about 3x (our calc). We read that gap as mostly price (our read). MOTIE's own figures point the same way: the contract price of a standard DRAM chip (DDR5 16Gb) was $48.00 in September, up 687.5% from a year earlier.
The gap is also widening. In August it was about 2.7x: exports were 3.1x a year earlier and US output 1.15x (our calc).
Our read: most of this boom is memory prices, not more chips. Three caveats. US output is a proxy for chip volume, not a count of Korea's shipments. And September had fewer working days in Korea because of the Chuseok holiday. MOTIE also cites a quarter-end effect for September.
What would prove us wrong
Set before publication. We report back in public when one trips.
- the volume-value gap closing below 1.5x on our same calc (our pre-set line), or MOTIE crediting the gains mainly to shipment volume rather than prices. MOTIE currently cites both. Open · next check: Next MOTIE monthly release
Method and sources
Figures marked "our calc" are our own arithmetic on the cited primary sources (company filings, earnings releases, public datasets). Every figure was checked against its source before publication.
General research, the same for every reader. Not investment advice.