S. Korea chip exports could fall $50b to $100b if AI spending is cut
The Bank of Korea's "pessimistic scenario" would take about 0.4 percentage point off South Korea's GDP growth next year, with chips roughly half of exports.
South Korea's chip exports could come in $50 billion to $100 billion below earlier forecasts if big US technology companies cut back their spending on artificial intelligence (AI) next year, according to central bank data.
A "pessimistic scenario" from the central bank
The Bank of Korea (BOK) set out the "pessimistic scenario" in its reply to questions from lawmaker Ahn Do-geol. It looked at the economic damage if US tech giants pull back on their heavy infrastructure outlays.
In that case, the export shortfall would take about 0.4 percentage point off South Korea's GDP growth next year. It would do so by pushing the current account surplus well under the BOK's original projection of $430 billion for 2027. The scenario also assumed Korean semiconductor unit prices would drop by 10 per cent.
Heavy reliance on chips
Chips make up roughly half of South Korea's exports, and the assessment highlights growing anxiety over that dependence.
The report pointed to rapid growth in spending by five major US firms: Amazon, Google, Microsoft, Meta and Oracle. Next year the five firms' joint capital spending is forecast to reach $110 billion, up from an estimated $80 billion in the current year and $40 billion the year before.
The BOK also cautioned that considerable uncertainty remains over where AI demand is heading, and over the wider memory chip business cycle.
