Bank of Korea: Semiconductor Upcycle Extends Beyond 2026
N.R. Finch
The Bank of Korea said on July 13 that the semiconductor expansion will stretch past 2026, upgrading its previous forecast; the statement came as Korean equities kept falling and markets worried the cycle had peaked.
How long has this upcycle actually lasted?
The current expansion started in March 2023 and has now run for roughly 40 months.
This means → it has far exceeded the 29-month average of the five expansion cycles between 2000 and 2020, and its intensity is notably stronger too.
In plain terms = the cycle is not just longer than usual — it is also more powerful.
Why does the central bank believe it can keep going?
The core logic: AI-infrastructure investment has driven a surge in demand, while supply expansion has lagged well behind.
High-performance products are technically difficult; HBM — high-bandwidth memory, a custom high-speed memory built for AI chips — takes a long time to ramp to mass production.
This reflects a structural feature: even if demand wobbles, supply cannot flood the market quickly, giving prices and the broader cycle a cushion.
What makes this cycle fundamentally different from past ones?
The Bank of Korea drew a clear line: previous expansions were pulled by consumer electronics or traditional IT demand; this one is driven by competitive investment from companies betting that AI will reshape the entire industrial ecosystem.
In plain terms = before, the chain was "phones sell well → chips follow." Now it is "every major company fears falling behind on AI → capital pours into infrastructure."
JPMorgan, Goldman Sachs, and Morgan Stanley all expect the global semiconductor market to stay strong at least through next year.
How much has the central bank's tone shifted?
Last November, then-Research Director Lee Ji-ho said the cycle "could last until 2026" but was cautious about 2027.
This January, former Governor Rhee Chang-yong struck a measured tone: "Whoever wins the AI race, semiconductors are a necessity."
This means → the latest written reply pushes the horizon to "beyond 2026" — the most explicit language in all three statements.
What needs to happen for this call to hold?
Two validation checkpoints: whether AI demand keeps converting into actual orders, and whether mass production of HBM and other high-end products can keep pace.
If AI investment slows or production bottlenecks persist, the supply-side cushion will gradually erode.
This reflects the fact that the central bank's optimism is conditional — the extended cycle depends on both demand and supply meeting their marks.
Content is for reference only, not financial advice.