The Bank of Korea (BOK) recently warned that South Korea's semiconductor exports could decrease by up to $100 billion compared to previous forecasts if major American technology firms slow down their capital investment infrastructure spending in the coming year. According to BOK data, the combined capital expenditure of five major American technology firms - Amazon, Google, Microsoft, Meta, and Oracle - is expected to reach $110 billion in the coming year. However, BOK warned that there is still much uncertainty about future trends in AI demand and general chip memory business cycles.

In a pessimistic scenario presented by BOK, a sudden suspension of exports could reduce annual GDP growth in South Korea by approximately 0.4 percentage points. This scenario predicts a 10% decline in the unit price of South Korean semiconductor components. The report also highlighted growing concern over its large dependence on chips, which account for around 50% of its exports.

Despite BOK's acknowledgment that there is still much uncertainty about future trends in AI demand and general chip memory business cycles, it emphasized the importance of continuing to invest in sectors to maintain South Korea's competitiveness in the global market. The warning serves as an important reminder to maintain continuous growth in AI to avoid significant economic disintegration. Follow us on: 'Our Editor's Week' where our editor shares analysis and top news every Saturday.

Receive our best news and thoughts in your preferred chat app. We know it's annoying to change browsers but we want you to have the best experience with CNA possible. Upgrade to a supported browser or, if you prefer, download the mobile app.