South Korea experienced a 21.9% nominal GDP growth in the first half of 2026, with semiconductors accounting for nearly 70% of this expansion. The Bank of Korea reports that chip revenues have reached levels unseen since the 1970s, as semiconductor exports exceeded 40% of total shipments in certain months of 2026.
The surge is driven by global demand for high-bandwidth memory and advanced DRAM chips. Samsung Electronics and SK Hynix, which supply major tech firms like Nvidia, AMD, Microsoft, and Google, now represent nearly half of the market capitalization and the majority of earnings growth on the KOSPI index.
The Bank of Korea identifies this concentration as a potential threat to financial stability. Leveraged ETFs linked to Korean tech companies grew more than 20-fold in the first half of 2026. The central bank warns that excess liquidity is flowing into real estate and leveraged products, creating bubble risks.
Analysts note that a potential slowdown in global AI infrastructure spending in 2027 or 2028 could cause systemic damage to the Korean economy. Additional risks include rising competition from Chinese memory chip manufacturers, high household debt, and the country's demographic challenges, including a fertility rate near 0.7.
