Korea’s semiconductor boom fuels record exports, stock surge

South Korea’s exports surpassed $59.5 billion last month, marking the highest October total on record. Despite fewer business days due to the Chuseok holiday, exports rose 3.6% from a year earlier.

The KOSPI, which has been climbing steadily, broke the 4,000 mark just a week ago and surpassed 4,200 on Nov. 3. The simultaneous surge in exports and the stock market is driven by the semiconductor industry. As Korea’s leading sector enters a supercycle, it is injecting new energy into an economy that has long faced stagnation.

The semiconductor boom is boosting the broader industrial sector. According to national data, industrial production in September rose 1.0% from the previous month, driven largely by a 19.6% increase in semiconductor output. Rising semiconductor-related construction lifted overall capital investment, while spending on semiconductor manufacturing equipment also grew. Third-quarter gross domestic product rose 1.2%, increasing the likelihood of 1% annual growth. Improved corporate profits in the semiconductor sector also boosted tax revenues, with corporate taxes collected in the first nine months exceeding last year’s total by more than 21 trillion won.

Industry experts expect this semiconductor boom to represent a qualitatively different, long-term supercycle compared with 2017–2018. The expansion of the artificial intelligence market continues to generate new demand in autonomous driving, robotics, and other sectors. As AI use expands from learning to inference, demand is increasing not only for high-bandwidth memory but also for older memory types. In some cases, supply cannot keep pace with demand, creating bottlenecks.

However, failing to seize this opportunity could reduce the boom to a short-lived effect. During the 2017–2018 semiconductor surge, Korea was slow to prepare for upcoming changes, such as the AI transition. Urgent industrial restructuring was postponed, and increased tax revenues were largely used to expand government spending. When the semiconductor boom ended in 2019, the Korean economy fell into a corresponding slowdown and has since struggled to escape a long-term low-growth trap averaging about 1%.

This time, the same mistakes must be avoided. Companies should not rest on current gains but focus on developing cutting-edge technologies and pursuing innovation. The government and the National Assembly should support firms through measures such as the Semiconductor Special Act and accelerate structural reforms to strengthen economic fundamentals and potential growth. Increased tax revenues should also be used to restore fiscal soundness. This semiconductor supercycle should be regarded as the last opportunity to lift South Korea’s economy out of prolonged low growth.