Bank of Korea Report Says Global Chip Market Remains Undersupplied

The Bank of Korea said on July 13 that the global semiconductor market remains undersupplied and that the AI-driven supercycle is expected to continue for some time. The report, submitted to Rep. Park Sung-hoon, stated that semiconductor demand has surged due to investments in AI infrastructure while the pace of supply expansion has been slow.

It added that the semiconductor cycle has yet to slow and differs from previous cycles because it is driven by competitive corporate investment anticipating fundamental changes from AI. "The pace of supply expansion is more constrained than in the past, as the market is led by custom products such as high-bandwidth memory (HBM)," the Bank of Korea said.

" The assessment comes after sharp share-price declines at major South Korean chipmakers.

Samsung Electronics shares fell more than 9 percent on July 2, and SK hynix shares dropped nearly 15 percent that day. On the Tuesday before the report, Samsung shares fell 7 percent and SK hynix shares lost 6 percent even after Samsung reported nearly 90 trillion won ($59.9 billion) in second-quarter operating profit.

"There is uncertainty surrounding the pace and scope of AI technology adoption, as well as its profitability," the Bank of Korea said.

It noted that major investment banks including J.P. Morgan, Goldman Sachs and Morgan Stanley generally forecast the global semiconductor market will remain robust at least through next year.