"Is the semiconductor cycle at its peak? Not yet"... AI-driven boom to continue through next year

[Financial News] As talk of a semiconductor peak gains traction, the Bank of Korea said the global semiconductor cycle is likely to remain in an expansion phase for the time being. It assessed that rising investment in AI infrastructure is boosting demand, while supply growth remains limited, making a slowdown in the semiconductor industry unlikely.
In a written response submitted to Park Sung-hoon of the People Power Party on the 13th, the Bank of Korea said that recent semiconductor market conditions show that "demand for semiconductors has risen sharply due to investment in AI infrastructure, while the pace of supply expansion has been slow."
It also stressed that this semiconductor upcycle differs from past business cycles. The bank explained that companies are continuing aggressive investment as AI technology spreads and reshapes the industry itself, making this more than a simple inventory adjustment or a typical recovery phase.
Supply-side constraints were also cited as a factor supporting the boom. The Bank of Korea analyzed that "high-performance products require a considerable amount of time to reach mass production because of technical difficulties," and that "as customized products such as High Bandwidth Memory lead the market, the pace of supply expansion is more limited than in the past."
Accordingly, the Bank of Korea expects the global semiconductor cycle to remain in an expansion phase for a considerable period. It said the current market is showing strong momentum, driven by rising investment in AI infrastructure such as data centers, and is far outpacing previous expansion cycles.
Market watchers say the Bank of Korea's assessment could also affect future economic forecasts. Since semiconductors are a key industry driving South Korea's exports and facility investment, whether the sector's upturn continues will be an important variable in growth forecasts and policy rate decisions.
In fact, the semiconductor expansion phase has already lasted for a long time. The Bank of Korea said the current upcycle has continued since March 2023 and has already exceeded the average length of past semiconductor expansion periods.
Global investment banks are also upbeat about the semiconductor industry. The Bank of Korea said that, although uncertainties remain over the pace of AI adoption and profitability, major global investment banks including JPMorgan Chase, Goldman Sachs and Morgan Stanley expect the global semiconductor cycle to stay strong at least through next year.
Shin Hyun-song, governor of the Bank of Korea, is expected to comment on the recent economic trend and the semiconductor outlook at a press briefing after the Monetary Policy Board's monetary policy meeting on the 16th.

imne@fnnews.com Hong Ye-ji Reporter