Key facts
- The Bank of Korea believes the global semiconductor market is still undersupplied.
- The current AI-driven supercycle is expected to persist.
- Concerns about the chip cycle peaking have been dismissed by the BOK.
- Supply expansion has been slow compared to demand driven by AI infrastructure investments.
- The market is characterized by custom products like HBM, constraining supply.
- Major investment banks predict a strong semiconductor market through next year.
The Bank of Korea (BOK) has indicated that the global semiconductor market is experiencing an AI-driven supercycle that is expected to continue, countering concerns about a potential peak. In a report submitted to Rep. Park Sung-hoon, the central bank stated that demand for semiconductors has surged due to investments in AI infrastructure, but supply expansion has lagged, suggesting the cycle has not yet slowed.
The BOK highlighted that the current chip cycle is distinct from previous ones, being propelled by competitive corporate investments anticipating fundamental shifts in the industrial ecosystem driven by AI. The report noted that supply expansion is more constrained than in the past, particularly with custom products like high-bandwidth memory (HBM) leading the market. Consequently, the global semiconductor market is projected to maintain its expansionary trend for a significant period.
These remarks come at a time when investors are expressing concerns about debt-fueled AI infrastructure spending, high market valuations, and the possibility of a memory chip oversupply, which has led to selloffs in major technology stocks. In South Korea, leading chipmakers Samsung Electronics and SK hynix have experienced sharp declines in their stock prices. Despite Samsung Electronics reporting a second-quarter operating profit that exceeded market expectations, its shares fell significantly, as did those of SK hynix.
The BOK acknowledged uncertainties surrounding the pace and scope of AI technology adoption and its profitability. However, it also noted that major investment banks, including J.P. Morgan, Goldman Sachs, and Morgan Stanley, generally forecast that the global semiconductor market will remain robust at least through the following year.