Corporate card spending hits record high in Q2 on chip boom

Corporate credit card spending in South Korea hit a record high in the second quarter as the semiconductor industry boom boosted corporate earnings and business activity.

According to the Bank of Korea (BOK) on Sunday, corporate credit card spending by companies, associations, and public institutions reached 61.78 trillion won ($45.62 billion) during the April-June period, up 10.6 percent from a year earlier and the highest since quarterly data began.

The number of corporate credit cards issued also reached a record 11.75 million. While spending rose 10.6 percent on year, the number of cards issued and transactions increased just 1.3 percent and 1.5 percent, respectively.

Average spending per transaction rose 9 percent to 179,320 won in the second quarter from 164,540 won a year earlier.

The increase in corporate card spending has been attributed to strong semiconductor demand fueled by the artificial intelligence (AI) investment boom and improving corporate earnings.

As gains spread beyond major chipmakers such as Samsung Electronics Co. and SK hynix Inc. to materials, components, and equipment suppliers, companies have had more room to spend on business travel, external meetings, and employee benefits.

The BOK said corporate gross operating surplus, a measure of corporate income, reached 433 trillion won in the second quarter, up about 48 percent from 291 trillion won a year earlier and the highest since data began in 2010.

Gross operating surplus, which measures the share of value added left after wages and other labor costs are deducted, rose from 313 trillion won in the fourth quarter of last year to 366 trillion won in the first quarter and 433 trillion won in the second quarter as the memory chip industry recovered.

Samsung Card Co. said in a recent investor filing that stronger global semiconductor demand had improved corporate earnings, income, and asset conditions, contributing significantly to the increase in card spending.

A business community official also said that “companies benefitting from the chip boom were expanding business activities such as external meetings and business trips, driving up selling, general and administrative expenses.”

The improvement in corporate earnings, however, has yet to fully translate into household consumption.

Personal credit card spending rose 6.2 percent on year to 231.52 trillion won in the second quarter, below the growth rate of corporate card spending.