South Korea Trade Minister Says Chip Boom Can’t Last, Urges Faster Investment for Future

Trade Minister Kim Jung-kwan speaks at Korea Chamber of Commerce and Industry forum

“A semiconductor boom is not a boom for society”

Calls for regional investment and a broader ecosystem

“A boom in the semiconductor industry does not mean a boom for society as a whole.”

Kim Jung-kwan, South Korea’s trade minister, made the remarks on July 16 during a lecture at the Korea Chamber of Commerce and Industry’s Jeju Forum at the Shilla Jeju hotel.

“Most companies outside semiconductors are struggling severely, yet people think the entire corporate sector is surging,” he said.

Kim said some have described the semiconductor industry’s current upcycle as a structural boom. But no industry has permanent prosperity, and investment to prepare for the future must accelerate, he added.

He said the economy is now at a moment of upheaval and identified artificial intelligence, regional development and the industrial ecosystem as the three key battlegrounds for an economic rebound.

“If AI is a new playing field opening a new era, the regions are the space that will hold the AI era,” he said. “If we fail to revive the regions in this shift, there is no future for our economy.”

Kim compared the Seoul metropolitan area and the regions to a large tree and saplings to underscore the need for regional investment.

“Choosing to invest in the regions instead of focusing on the capital area may look like a major political gamble,” he said. “Even so, there are limits to reviving economic growth if investment remains concentrated only in the large tree of the capital region.”

He also said few companies will be able to succeed alone in the AI era and that the ecosystem will be the force that leads that era.

Kim said younger people are the group best positioned to use AI, but also the group most fearful that AI could take their jobs.

The older generation needs to embrace younger people so they can participate in that ecosystem, he said. Without bridging class and regional conflicts, such an ecosystem cannot be built.

Kim said AI, regional development and the ecosystem are key battlegrounds, but the true battleground is the global market.

The government will fully support companies as they adopt AI, invest in the regions, build ecosystems and expand into global markets, he said.

After the lecture, Kim told reporters that calls for social redistribution of excess profits from the semiconductor sector have become a major issue.

“Because it is such a big issue, there are bound to be many voices,” he said. “I think the process will eventually move in a broader direction.”

He added that demand for investment funding could exceed corporate profits and that South Korea needs to focus more on investment to secure incentives in the AI era.

Shin Jung-eun, Hankyung.com reporter newyearis@hankyung.com