Samsung and SK Hynix: Let’s Share the Semiconductor Boom Benefits with Airlines

Key Takeaways

Global air cargo demand increased by 3.9% in July 2023, driven significantly by semiconductor and AI-server shipments.
Asia to North America air cargo routes saw a 9.2% growth, emphasizing strong demand for high-value IT products.
Korean Air reported a substantial rise in cargo revenue, indicating a shift towards transporting high-value items instead of traditional e-commerce goods.

Shifts in Air Cargo Demand Driven by AI and Semiconductors

Investment in artificial intelligence (AI) data centers is reshaping the air cargo landscape, with high-value information technology (IT) goods, such as semiconductors and AI servers, emerging as significant contributors. According to the International Air Transport Association (IATA), global air cargo demand rose by 3.9% in July 2023 compared to the previous year, largely fueled by strong demand for freight from Asia to North America, which increased by 9.2%. This growth is attributed to robust manufacturing activities and export orders.

A report from SDS’s Cello Square indicates that shipments of AI-related semiconductors from South Korea, Taiwan, and Vietnam have experienced double-digit growth, particularly on routes to America. In contrast, e-commerce shipment volumes to Europe declined during the same period due to new small-parcel tariffs.

On the supply side, global air cargo capacity saw a modest increase of 1.8% in July, whereas dedicated freighter capacity grew by 6.3%. Conversely, the cargo capacity of passenger aircraft declined by 2.8%. This trend suggests a strategic shift towards dedicated freighter operations, particularly with a 16% increase in freighter capacity on routes from Northeast Asia to North America.

The characteristics of cargo bound for AI data centers necessitate specific handling. Semiconductors and related equipment are not only high-value assets but also require timely delivery to align with construction schedules for data centers. This critical need for reduced transit times reinforces the rising demand for air cargo services. High-value goods like semiconductors and AI servers are becoming the primary drivers of air cargo demand on the Asia to North America routes.

The evolving dynamics of air cargo are also reflected in the earnings of full-service carriers, which typically carry a larger volume of cargo compared to low-cost airlines. For instance, Korean Air saw its cargo revenue reach 1.5419 trillion won in the second quarter of 2023, marking an increase of 486.5 billion won from the previous year. This surge in revenue is largely attributed to heightened demand for transporting advanced semiconductors, such as high-bandwidth memory (HBM) and DDR5 components, driven by increasing global investments in AI.

Industry experts note that the air cargo sector is transitioning away from its traditional reliance on e-commerce, with AI and semiconductor shipments becoming vital new sources of demand. If this trend continues, it may significantly influence the operational strategies of airlines and logistics providers as they adapt to maintain competitive advantages in securing high-value cargo.

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