AI chips lift Japan's exports 16.7% as oil nearly doubles its deficit

At a glance: WCRC Leaders' assessment: Japan's September trade data show the AI hardware cycle and the Gulf oil squeeze now drive Asian trade together, and boards need plans for both at once. Japan's Ministry of Finance said on 21 October that exports rose 16.7% to ¥10.97tn, led by integrated circuits and chipmaking machinery. Imports rose faster, up 18.9%, as the crude oil bill climbed 51.1% on only 3.1% more volume. The trade deficit widened 93.2% to ¥536.6bn.

What did Japan's September trade figures show?

The provisional figures from Japan's Ministry of Finance put September exports at ¥10,972.3bn, up 16.7% from ¥9,404.9bn a year earlier. Imports rose 18.9% to ¥11,508.8bn. The deficit came to ¥536.6bn, up from ¥277.7bn in September 2025, a widening of 93.2%.

Electronics drove the export side. Electrical machinery exports rose 30.3% to ¥2,147.9bn. Inside that group, the line the ministry calls "semiconductors etc." grew 49.4% to ¥933.7bn, and integrated circuits alone rose 55.5% to ¥734.4bn. Exports of semiconductor-making machinery rose 43.9% to ¥553.3bn, and their volume, measured in tonnes, rose 38.4%. Japan is selling more of the machines, not just charging more for them.

Cars still matter. Motor vehicle exports rose 15.1% in value to ¥1,719.1bn, but the number of units shipped fell 0.5%. Value grew while volume stayed flat. Chips and chip tools grew in both.

Where are the chips and chip tools going?

Mostly to Asia. Of Japan's ¥734.4bn of IC exports, ¥710.3bn went to Asian buyers, up 56.3%. Asia also took ¥476.6bn of the ¥553.3bn in chipmaking machinery, up 39.3%. Total exports to Asia rose 17.5% to ¥6,073.6bn.

The country figures show where the AI build-out is concentrated. Exports to Taiwan rose 37.8% to ¥918.8bn. Exports to South Korea rose 35.5% to ¥781.4bn, and chipmaking machinery shipped there rose 82.4% to ¥97.2bn. Exports to ASEAN rose 25.3%. China grew more slowly: exports there rose 8.6% to ¥1,730.0bn, with chipmaking machinery up 14.3%.

The United States was the fastest-growing large market, up 22.9% to ¥1,963.0bn. Chipmaking machinery exports to the US rose 93.1% to ¥61.3bn, a sign that new American fab capacity is now buying Japanese equipment.

Primary data from elsewhere in Asia fit the same pattern. South Korea's Ministry of Trade, Industry and Resources reported on 1 October that September exports rose 83.5% to a record $120.94bn, with semiconductor exports up 262.8% to $60.30bn. TSMC reported on 15 October third-quarter revenue of NT$1,494.24bn (US$46.72bn), up 50.9% in Taiwan dollars. Its CFO, Wendell Huang, said the quarter was "supported by strong demand for our leading-edge process technologies." TSMC guided fourth-quarter revenue to US$52.3bn to US$54.3bn.

Why did the deficit nearly double?

Oil prices. Japan imported 11.17 million kilolitres of crude in September, only 3.1% more than a year earlier, but paid ¥1,110.2bn for it, up 51.1%. Mineral fuel imports overall rose 39.4% to ¥2,346.3bn. LNG imports cost 39.2% more even though volume fell 7.3%. Coal cost 26.9% more on 1.0% less volume. Price, not volume, did nearly all the damage.

The background is the Gulf. The US Energy Information Administration's October Short-Term Energy Outlook, released on 6 October, assumes that oil flows from the Middle East "will remain constrained through the fourth quarter of 2026." It raised its fourth-quarter Brent forecast by $14 to $105 a barrel, forecasts a 2026 average of $96, and expects prices to ease to $84 in 2027. South Korea saw the same squeeze: its crude import value rose 38.4% on 2.0% more volume, and its trade ministry blamed a 14.1% fall in exports to the Middle East on "difficulties with vessel passage through the Strait of Hormuz."

What changed in Japan's trade with the Gulf?

Both directions shrank. Japan's exports to the Middle East fell 12.0% to ¥357.1bn, the only major region to decline. Vehicle exports there fell 35.2% in units and 13.1% in value. Imports from the Middle East fell 7.0% to ¥815.2bn, even though Japan's total crude bill rose by half.

Japan made up the gap with American supply. Crude imports from the United States rose 513.8% in volume and 819.7% in value, to ¥382.2bn. LNG from the US rose 541.6% in value to ¥65.5bn. Total imports from the US rose 44.8%. On WCRC's calculation from the ministry's tables, US crude made up about 34% of Japan's crude import bill in September.

WCRC analysis: this is a warning for Gulf exporters. Oil revenue per barrel is higher, but a large Asian customer has shown it can rebuild supply from the Atlantic within months. Once refiners sign term contracts, logistics and insurance arrangements built under stress tend to outlast the crisis that created them.

What does this mean for India's electronics and semiconductor push?

The bilateral numbers point both ways. Japan's exports to India rose 5.7% to ¥256.4bn, well below its growth into the rest of Asia. Imports from India jumped 66.3% to ¥119.0bn, cutting Japan's surplus with India by 19.7% to ¥137.4bn.

The policy timeline matters more. The Union Cabinet approved Semicon 2.0 on 15 July 2026 with an outlay of ₹1,27,500 crore. Its pillars include incentives for makers of equipment, materials, chemicals and gases, which is exactly the space Japanese suppliers lead in. The Press Information Bureau says the first fab is due to be commissioned in 2028. At SEMICON India in September, the government said five of the 12 units approved under the first mission were in commercial operation, and that Tokyo Electron plans a semiconductor training centre in Gujarat in 2027 with the Government of Japan.

WCRC analysis: Japan's chipmaking-tool order books are filling with Taiwanese, Korean and American work now. Indian projects that need the same machines for 2027 and 2028 start-ups compete for delivery slots in a tight market. The oil bill is the other pressure. India buys much of its crude from the Gulf, so a Brent forecast near $100 raises costs for the power-hungry fabs, packaging plants and data centres the mission is meant to attract.

What should CEOs and boards in Asia take from this?

Three points stand out. AI hardware demand is broad, reaching Taiwan, Korea, ASEAN and the US at the same time. Energy is now an input cost that moves on Gulf shipping risk, not on demand. And trade routes are being rewritten within a single quarter, as Japan's shift to US crude shows.

Earlier WCRC coverage set out the supply side of this cycle: TSMC and ASML's record quarters and ASML's warning that chip supply falls short to 2028, and how chips and servers drive almost half of world merchandise trade growth. For the shipping risk behind the oil bill, see our report on Hormuz attacks and board risk, and for India's own September data, India's exports led by electronics and US demand.

The WCRC View

From the WCRC Business Intelligence Unit

• The call. Japan's September data mark the point where the AI hardware boom and the Gulf energy squeeze show up in the same trade statistics, and neither cancels the other. Chip-tool exporters and US energy suppliers gain. Energy-importing manufacturers and Gulf exporters dependent on Hormuz transit lose margin or market share.
• India. Indian boards in electronics, semiconductors and data centres should lock in equipment delivery slots and power contracts now. Tool lead times and energy prices are moving against late buyers, and Japanese partners are the obvious route to both equipment and training.
• The Gulf. Gulf producers and sovereign investors should treat Japan's switch to American crude as a loss of customer loyalty to be won back, through bypass capacity, long-term supply deals and downstream investment in Asian buyers' own markets.
• Asia. Taiwanese and Korean suppliers ride the same cycle but carry the same oil bill. Their CFOs should stress-test 2027 budgets at Brent of $100 or more, not at the EIA's $84 central case.
• What WCRC will watch. Japan's October trade figures on 18 November, for whether chip-tool growth holds and whether the shift to US crude sticks; the next EIA outlook; and India's Semicon 2.0 project approvals ahead of the 2028 fab target.

Quick answers

Q: How much did Japan's exports grow in September 2026? A: Exports rose 16.7% year on year to ¥10.97tn, according to the Ministry of Finance's provisional data released on 21 October.

Q: What drove the export growth? A: Electronics. Integrated circuit exports rose 55.5% to ¥734.4bn, the wider semiconductors category rose 49.4%, and chipmaking machinery rose 43.9% to ¥553.3bn.

Q: Why did Japan's trade deficit widen? A: Imports rose 18.9%, faster than exports. The crude oil bill rose 51.1% while volume rose only 3.1%, so the deficit widened 93.2% to ¥536.6bn.

Q: What happened to Japan's trade with the Middle East? A: Exports to the Middle East fell 12.0% to ¥357.1bn and imports fell 7.0% to ¥815.2bn, while crude imports from the United States rose 819.7% in value.