Sales growth and operating margins at South Korean companies climbed to record levels in the second quarter, driven by a boom in the semiconductor industry as investment in artificial intelligence expanded and lifted manufacturing revenue and profit. Earnings gains at large chipmakers including Samsung Electronics and SK hynix accounted for much of the improvement in the overall figures. Excluding those two companies, the gains in manufacturing sales and profitability were far smaller.
Sales at companies subject to external audits rose 26.7% from a year earlier in the second quarter, up 13.2 percentage points from 13.5% in the previous quarter, the Bank of Korea said on the 9th in its second-quarter 2026 corporate management analysis. That was the highest level since the first quarter of 2015, surpassing the previous record of 24.9% set in the fourth quarter of 2021.
Manufacturing led the increase. Sales growth in the sector jumped to 39.6% in the second quarter from 21.1% in the first. Growth in machinery and electrical and electronic equipment accelerated to 88.5% from 52.1%, while electronics, video and communications equipment surged to 119.7% from 75.7%. The gains reflected a sharp rise in chip demand as AI investment expanded.
The two large chipmakers had an outsized effect. Excluding Samsung Electronics and SK hynix, manufacturing sales growth falls to 14.0%, less than half the rate for the sector as a whole.
Sales growth in non-manufacturing also picked up, to 9.7% from 3.7%. Transportation rose to 13.6% from 8.1%, and wholesale and retail to 13.7% from 7.1%. Higher shipping rates tied to the conflict in the Middle East and stronger air cargo demand supported transportation, while broad improvement in retail, including chip distributors and department stores, lifted wholesale and retail.
Construction also recovered. Sales growth turned positive at 0.3% in the second quarter from minus 4.0% in the first, the first increase in eight quarters, mainly on a larger volume of semiconductor plant construction.
Sales growth widened at both large companies and smaller firms. Large companies posted 30.5%, up from 16.0%, while small and medium-sized enterprises rose to 10.2% from 2.4%.
Profitability improved sharply. The operating margin across all industries reached 16.9% in the second quarter, up 3.7 percentage points from 13.2% in the previous quarter and 11.8 percentage points higher than the 5.1% recorded a year earlier. It was the highest level since the first quarter of 2015.
The manufacturing operating margin came to 24.0%, roughly five times the 5.1% posted in the second quarter of last year. Machinery and electrical and electronic equipment reached 43.0%, far above 7.4% a year earlier. The Bank of Korea said the chip industry benefited from operating leverage, in which fixed costs decline relative to revenue as output rises, sharply expanding operating profit.
Non-manufacturing, by contrast, saw its operating margin slip to 5.0% from 5.1%. Transportation fell to 4.8% from 7.0% as high fuel prices and the use of detour routes raised costs.
Excluding the two large chipmakers, the improvement in profitability looks markedly different. The all-industry operating margin without Samsung Electronics and SK hynix stood at 6.2%, or 37% of the overall figure of 16.9%. The manufacturing operating margin also falls to 7.2% excluding the two companies.
"Even excluding Samsung Electronics and SK hynix, growth and profitability are improving, and indicators are improving across the board regardless of sector," said Lee Mi-joo, head of the Bank of Korea's corporate statistics team. "The manufacturing operating margin excluding Samsung Electronics and hynix is 7.2%, so the gap between manufacturing and non-manufacturing is not that large."
Financial soundness improved overall. The debt-to-equity ratio for all companies fell to 84.5% in the second quarter, down 2.5 percentage points from 87.0% in the first quarter, and the borrowing dependence ratio declined to 22.8% from 23.9%.
Large companies and smaller firms diverged, however. The debt-to-equity ratio at large companies fell to 79.8% from 83.8%, while at small and medium-sized enterprises it rose to 112.1% from 103.0%. Their borrowing dependence ratio also increased, to 31.1% from 30.7%.
Lee attributed the weaker financial stability at smaller firms to stronger funding demand, saying it was "understood to reflect greater demand for funds, centered on some non-manufacturing sectors such as accommodation and food services and wholesale and retail."
The Bank of Korea expects corporate earnings to keep improving in the third quarter as the chip boom driven by AI investment continues and domestic demand recovers. It added that differences across sectors and company sizes warrant monitoring, given persistent uncertainty over the conflict in the Middle East and U.S. tariff policy.
