Qatar National Bank (QNB) said South Korea's trade performance this year reflects a remarkable ability to adapt to shifts in global trade, noting that Seoul has redefined its role in the system.

In its weekly report, the bank said the strength of Korea's trade performance was evident in record export volumes, leadership in semiconductors and its historic security partnership with the United States.

It explained that reducing South Korea's reliance on China is pushing Seoul to develop new, more diversified trade relationships in Southeast Asia and beyond.

The report said the emergence of a world-class defense industry has created a new source of revenue and strengthened South Korea's ability to play an active role in the global trade system by building new partnerships, developing industrial sectors and forming strategic alliances.

The bank also said South Korea's ability to produce and export strategic technologies at scale, alongside building a network of security and trade partnerships, has strengthened its position in the global economy.

It noted that South Korea's exports exceeded USD 100 billion in June for the first time, posting annual growth of 70.9%.

It attributed the rise to higher exports of semiconductors and solid-state drives used to store computer data, which, according to the report, drove growth in information and communications technology exports.

It said exports from this sector exceeded half of the country's total exports for the first time, while South Korea's total exports had already hit a record USD 709.7 billion last year, producing the largest trade surplus at that time since 2017.

The bank attributed export growth mainly to rising demand for memory chips used in artificial intelligence applications, highlighting South Korea's role in supplying these chips in large volumes.

Against this strong export performance, the report noted that shifts in the global trade system pose new challenges for South Korea, amid a trend toward reducing interdependence between economies, changes in its trade relations with China, and intensifying competition in the memory-chip market, one of the main drivers of its exports.

It said South Korea now faces two strategic options that will shape its future: either remain an exporting nation that relies on the volume of chip exports and market access, or become a major power in the trade system that helps shape, from within, global supply chains for vital industries, particularly artificial intelligence and technology.

The bank said South Korea is seeking to combine both paths, noting that assessing its position in the global trade system requires looking at its main strengths, chief among them the memory-chip industry.

Qatar National Bank (QNB) explained that Seoul's export success rests on its global standing in memory chips, with Samsung Electronics and SK Hynix together holding about 73% of the global market for high-speed memory chips used in computers, smartphones and the massive data centers that support AI technologies.

The bank said demand for South Korean chips is growing at a pace other countries struggle to match, as the world's largest technology companies race to build AI infrastructure, while warning that relying on a single source of this success carries several risks.

The report said the dependence of South Korea's exports on a single product category heightens risks amid global trade turmoil, at a time when the importance of China is declining. For decades China was the largest and most profitable market for Korean exports, but Beijing is now developing domestic alternatives to Korean products in electronics, electric vehicles and batteries.

The bank said this has been reflected in South Korea's trade surplus with China, which fell sharply from nearly USD 100 billion in 2018 to just USD 20 billion last year.

It noted that South Korea responded by deepening its strategic partnership with the United States as an alternative, culminating in early 2026 in a historic trade and security agreement that reshaped bilateral relations more profoundly than any deal since the two countries signed their free trade agreement in 2012.

The report explained that under the agreement, US tariffs on South Korean goods were cut from 25% to 15%, giving South Korean exporters tangible relief. In return, South Korea pledged to invest USD 350 billion in the United States, including USD 150 billion in the US shipbuilding industry, the largest overseas investment commitment in the country's history.

The agreement allows South Korea to press ahead with plans to build nuclear-powered submarines, a capability Seoul has sought for years and considers essential to its long-term security.

The report said that, alongside diversifying its trade markets, South Korea has developed a promising new export sector: the defense industry.

It noted that the agreement has not been free of challenges, as the United States launched a trade investigation in March into South Korea's manufacturing practices, reflecting ongoing unresolved trade issues between the two countries.

The report noted that, alongside recalibrating its relations with the United States, Seoul is seeking to expand its trade presence and diversify its markets, with Southeast Asia emerging as one of the most promising destinations for its exports.

The bank concluded its analysis by noting that Korean companies have set up large-scale manufacturing operations across the region and have become an established part of local supply chains in electronics, vehicles and consumer goods.