Semiconductor boom cycle could continue through late 2026: BOK

Visitors look at an explanation of the CPU semiconductor package substrate manufacturing process at Samsung Electronics booth set up at a semiconductor expo in the western city of Incheon, Sept. 4. Yonhap

The global semiconductor boom fueled by artificial intelligence (AI) demand is projected to continue through the end of next year, the central bank said Thursday.

"At this point, it seems the semiconductor cycle will extend into next year, though it is hard to predict whether it will last through 2027," the Bank of Korea (BOK) official Lee Ji-ho told a press briefing on the economic outlook.

"The semiconductor upcycle usually lasts around two years, but the current one may be prolonged by the global AI boom. If it continues until late 2026, its duration will be comparable to the IT bubble in around 2000," he added.

The Korean economy has been on a recovery track, supported by strong global demand for semiconductors and subsequent export strength, as well as improving consumer sentiment.

In October, exports rose 3.6 percent from a year earlier to $59.57 billion, extending gains for a fifth straight month, despite weaker shipments to the United States amid its aggressive tariff measures.

Particularly, chip exports surged 25.4 percent on-year to $15.73 billion, the highest ever for the month of October and the eighth consecutive month of on-year growth.

Reflecting these trends, the BOK revised up its 2025 economic growth forecast to 1 percent from 0.9 percent and raised its 2026 outlook to 1.8 percent from the previous 1.6 percent.

"Of the 0.1 percentage-point upward revision in this year's growth outlook, the semiconductor sector contributed 0.05 percentage point," BOK Deputy Gov. Kim Woong said.

The chip industry also accounted for 0.1 percentage point of the 0.2 percentage-point upgrade for next year, he added.

But the central bank cautioned that it is premature to view the economy as entering a full-fledged recovery. Excluding the IT manufacturing sector, next year's growth rate would be 1.4 percent, a level that cannot be considered "strong or sufficient," Lee said.

The BOK also pointed to the weak Korean won as a key concern, warning that a persistently high exchange rate could deepen economic disparities, particularly between major exporters and small and mid-sized businesses.