South Korean firms recorded historic highs in revenue and profitability in the second quarter of 2024, driven mainly by a rebound in the semiconductor sector linked to investments in artificial intelligence infrastructure, the Bank of Korea (BOK) reported.
Consolidated data for 26,509 companies subject to external audit showed revenue rose 26.7 percent year‑on‑year for April–June. That follows a 13.5 percent increase in Q1 and is the fastest growth rate in the BOK’s series that began in 2015, surpassing the previous peak of 24.9 percent in Q4 2021.
Manufacturing led the expansion
The improvement was concentrated in manufacturing: sector revenues increased 39.6 percent in Q2, up from 21.1 percent in the previous quarter. The BOK attributed much of this gain to strong performance by semiconductor producers, supported by heightened investment in AI infrastructure.
Construction revenues also turned positive after eight quarters, helped by higher orders for new semiconductor fabrication plants.
Non-manufacturing sectors and logistics
Non-manufacturing company revenues rose 9.7 percent in Q2, after a 3.7 percent increase in Q1. In logistics and maritime transport, performance was aided by robust demand for air freight and higher sea freight rates amid geopolitically driven tensions in the Middle East.
Profitability reached record levels
Corporate profitability improved markedly: operating profit as a share of revenue increased from 5.1 percent to 16.9 percent year‑on‑year. Manufacturing firms saw the largest gain — their operating margin jumped nearly fivefold to a record 24.0 percent.
By contrast, non-manufacturing companies’ operating margin edged down slightly from 5.1 percent to 5.0 percent, partly due to rising costs from higher oil prices and longer shipping routes.
Financial positions and divergence between firms
Overall corporate financial health improved: the debt‑to‑equity ratio fell to 84.5 percent in Q2 from 87.0 percent in Q1.
However, the gap widened between large firms and small‑and‑medium enterprises (SMEs). Large firms’ debt‑to‑equity improved from 83.8 percent to 79.8 percent, while SMEs’ ratio deteriorated from 103.0 percent to 112.1 percent.
Why this matters
BOK’s data indicate that AI‑related investment and a semiconductor upswing have materially boosted South Korea’s corporate performance in the short term. The divergence in financial resilience — notably the weaker position of SMEs — highlights a potential vulnerability if growth softens or cost pressures persist.
(Data: Bank of Korea; summary based on reporting by MTI.)
