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The Bank of Korea has said it is still premature to worry about a so-called "peak-out," the growing concern that the semiconductor cycle has passed its peak and is now declining.
In a written response submitted to People Power Party lawmaker Park Sung-hoon on Nov. 13, the BOK said, "While semiconductor demand has surged sharply due to artificial intelligence (AI) infrastructure investment, the pace of supply expansion has been slow."
Regarding semiconductor demand, the BOK noted, "This expansion differs from the past in that it is being driven by companies' competitive investment, amid expectations of fundamental changes to the industrial ecosystem stemming from the spread of AI."
On the supply side, it assessed, "The technical difficulty of high-performance products means mass production takes considerable time," adding, "Because made-to-order products such as high-bandwidth memory (HBM) are leading the way, the pace of supply expansion is more constrained than in the past."
Taking these factors into account, the BOK concluded that "the global semiconductor cycle is expected to continue expanding for a considerable period."
The BOK expressed a similar view in a recent business report to the National Assembly, stating that "major institutions expect the semiconductor cycle to remain strong through next year."
While noting "there is uncertainty surrounding the speed, scope and profitability of AI technology's spread," the BOK said, "Major investment banks such as JPMorgan, Goldman Sachs and Morgan Stanley generally forecast that the global semiconductor cycle will continue to be strong at least through next year."
This is seen as a step beyond the BOK's previous assessment that the semiconductor expansion would last through this year.
Earlier, BOK Assistant Governor Lee Ji-ho (then head of the Research Department) said at an economic outlook briefing last November, "The semiconductor cycle will continue a bit longer, into next year (2026)," adding, "Whether it will extend to 2027, I really don't know."
BOK Governor Shin Hyun-song is expected to address the recent economic situation as well as the semiconductor outlook at a press conference following the Monetary Policy Board's monetary policy meeting on the 16th.
