A Bank of Korea official expects South Korea’s chip output to climb next year, with high-bandwidth memory (HBM) production leading the way.
One catch: chip prices are expected to keep rising, but at a slower pace.
What the central bank is seeing
The Bank of Korea has projected that the semiconductor expansion will continue into the first half of 2027. The driver is spending on AI infrastructure. Companies building out data centers need advanced memory, and HBM sits at the center of that shopping list.
The BOK’s view is that demand for chips like HBM will keep outrunning supply, even as output grows. The reasons are practical. Making HBM is technically complex, and bringing new capacity online takes a long time.
That supply-demand gap is what keeps pricing power with the chipmakers. The central bank expects that pricing power to persist. It also expects price increases to be more moderate than in earlier phases of the cycle.
Locked contracts and slow-moving factories
Samsung Electronics has locked in 80% of its planned 2027 memory output under long-term contracts. That figure includes 100% of its HBM production. When a manufacturer has effectively sold out a key product line before the year begins, it tells you something about who holds negotiating leverage.
New capacity is coming. SK hynix’s M15X facility and Samsung’s Pyeongtaek site are both part of the expansion picture. But those additions are expected to ramp up gradually rather than all at once.
South Korea’s government is singing from the same sheet. Finance Minister Lee Hyoung-il said in October 2026 that chip demand exceeds supply. He also indicated the boom should last through at least 2027.
A cycle that has outlasted its predecessors
The current semiconductor cycle began in early 2023. It has already run longer than the average memory expansion of the past.
What makes this cycle different, at least in the BOK’s framing, is the type of demand. AI infrastructure spending has created appetite for a specific, hard-to-make product. HBM is not something a manufacturer can simply crank out faster by flipping a switch.
The ripple effect on Korean households
The BOK’s commentary from mid-to-late October 2026 points to spillover effects across the broader South Korean economy in 2027.
The most direct channel is pay. Major memory producers, including Samsung Electronics and SK hynix, are estimated to pay corporate bonuses of 60-70 trillion won. The BOK estimates those bonuses could add 0.1-0.15 percentage points to private consumption growth.
What this means
The slower pace of price gains is the detail worth watching. It hints that the most explosive phase of the cycle may be behind the industry, even if the expansion itself continues.
The biggest dependency is AI infrastructure spending. The entire forecast leans on hyperscalers and other buyers continuing to pour money into data centers.
Long-term contracts provide some cushion. With Samsung’s 2027 HBM output fully committed, near-term revenue visibility is unusually strong for a historically volatile business.
The key things to watch next are the timing of capacity ramps at SK hynix’s M15X and Samsung’s Pyeongtaek, any signs of cooling in AI infrastructure budgets, and whether the BOK keeps its expansion window anchored in the first half of 2027 or pushes it further out.
Disclosure: This article was edited by Diego Almada Lopez. For more information on how we create and review content, see our Editorial Policy.