How the AI chip boom has made South Korea a victim of its own success

For a sign of how the fierce demand for memory chips triggered by the boom in artificial intelligence (AI) is benefiting technology-driven economies, look no further than South Korea.

Last month, exports from Asia’s fourth-largest economy grew at a blistering rate of 53 per cent in annualised terms, the fastest pace since 1984. Shipments of semiconductors, which are used to store and funnel the huge amounts of data for AI services, increased nearly 170 per cent to a record monthly high of US$37.1 billion.

The continued upswing in the semiconductor cycle caused Bank of America to up its forecast for South Korea’s current account surplus this year to 15 per cent of economic output. In a report on June 2, Barclays said, “The most popular AI trade for 2026, for a global allocator, has been Korea or Taiwan – the world’s (and Asia’s) two best-performing major markets.”

Since the start of this year, the Kospi, South Korea’s main equity index, has risen 109 per cent. Last month, the market valuations of Samsung Electronics and SK Hynix, the country’s two semiconductor giants, rose above US$1 trillion as investors bet on sustained demand for memory chips and computing capacity.