Bank of Korea Rejects View That Samsung-SK Hynix Chip Cycle Has Peaked

BOK Rejects View That the Semiconductor Cycle Has Peaked

Supply Expansion Lags Even as AI Investment Surges

The Bank of Korea pushed back against claims that the semiconductor cycle has already peaked, saying the global chip upturn is likely to continue for a prolonged period as demand from artificial intelligence infrastructure investment rises faster than supply.

Yonhap News reported on July 13 that the BOK, in a written response submitted to Rep. Park Sung-hoon of the ruling People Power Party, described the current semiconductor market as being constrained by supply. Semiconductor demand has jumped on AI infrastructure investment, while the pace of supply expansion remains slow, the central bank said.

The BOK said this upcycle differs from past semiconductor cycles. It said the current expansion is being driven by competitive corporate investment at a time when the spread of AI is expected to bring fundamental changes to the industrial ecosystem.

On the supply side, the central bank cited the high technical complexity of advanced products and a market structure centered on custom-made products as limiting factors. It said the technical difficulty of high-performance products means mass production takes substantial time. It also said supply is expanding more slowly than in the past because custom-made products such as high-bandwidth memory, or HBM, are leading the market.

In effect, demand is rising quickly while supply is failing to keep up. On that basis, the BOK said the global semiconductor cycle is likely to remain in an expansion phase for a considerable period.

The central bank also said the current upturn is stronger than in previous cycles. It said the semiconductor cycle is showing a far stronger trend than past expansions, supported by robust global investment in AI infrastructure such as data centers. The BOK said the current expansion has lasted 40 months since March 2023, already longer than the average 29 months for the five expansion cycles recorded between 2000 and 2020.

The BOK said major global investment banks are also leaning toward a further expansion in the chip cycle. While uncertainty remains over the speed and breadth of AI adoption and over profitability, major firms including JPMorgan, Goldman Sachs and Morgan Stanley generally expect the global semiconductor cycle to remain strong at least through next year, it said.

That amounts to a longer time horizon than the BOK's earlier view that the semiconductor expansion would continue through this year. At an economic outlook briefing in November 2025, Lee Ji-ho, then head of the BOK's Research Department and now senior deputy governor, said the semiconductor cycle would continue into 2026, though it was unclear whether it would last through 2027.

BOK Governor Rhee Chang-yong also addressed concerns about an AI bubble at a January press briefing. No matter who emerges as the winner in the AI industry, semiconductors will still be needed, he said, adding that the outlook for related industries looked favorable for at least one year.

Some observers say stronger-than-expected semiconductor export data may also have influenced the BOK's assessment. Based on customs-cleared data, semiconductor exports rose 171.4% from a year earlier in April and 167.7% in May. Growth is estimated to have accelerated further in June, when monthly exports surpassed $100 billion.

Hong Min-seong, Hankyung.com reporter mshong@hankyung.com