South Korea’s Industry Minister Says Chip Boom Will Continue Through 2027

South Korea’s Finance Minister nominee Lee Hyoung-il said Saturday that the global semiconductor upcycle could continue at least through 2027.

“Our current assessment is that this growth can continue at least through next year,” Lee told CNBC on the sidelines of the IMF-World Bank annual meetings in Bangkok. He pointed to a significant imbalance between semiconductor demand and supply, adding that manufacturers are still expanding capacity.

Lee’s outlook came after a steep sell-off in semiconductor shares this week, as investors weighed the possibility of higher interest rates and intensifying competition from Chinese chipmakers. South Korean companies including SK Hynix and Seoul Semiconductor joined the decline, while U.S. chip heavyweight Nvidia also fell.

The heavy concentration of chip companies in South Korea’s stock market has amplified volatility this year, Lee said. Because semiconductors represent a larger portion of the country’s economy than they do in many other nations, shifts in the industry have an outsized impact on local equities. Even so, Lee described South Korea’s broader economy as “solid.”

A Thursday opinion article in Maeil Business Newspaper, one of South Korea’s leading financial publications, called on the government to prepare for a potential slowdown in the artificial intelligence boom. Citing two experts, the column warned that a “flood of new supply” could arrive in the semiconductor industry by 2029, turning the memory-chip market into what it described as a “red ocean,” according to a CNBC translation.

Although semiconductors have contributed to sharp swings in South Korean stocks, the sector has also boosted government revenue. Lee said tax collections are expected to exceed the initial forecast this year.

The semiconductor boom should ultimately leave South Korea in a stronger fiscal position, Lee added.

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