South Korea’s central bank, the Bank of Korea, said in a report released July 13 that the global semiconductor market is still undersupplied, and the AI-driven chip upcycle is likely to continue for some time.

The bank said demand has risen due to investment in AI infrastructure. Meanwhile, supply expansion has lagged, especially for custom products such as high-bandwidth memory (HBM).

This cycle differs from past ones because companies are investing in anticipation of broader industry changes from AI, while supply is rising more slowly than in earlier cycles.

The view comes as concerns over debt-funded AI spending, high tech valuations, and a possible memory-chip glut have weighed on South Korean chip stocks. Samsung Electronics fell more than 9% on July 2, while SK hynix dropped nearly 15%.

The sector matters to South Korea’s economy because semiconductors accounted for 18.9% of the country’s exports in 2022. The Bank of Korea separately said exports increased sharply in 2024 with help from AI-related semiconductor demand.

🔗 Source: Yonhap

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