BOK’s Shin Says Semiconductor Boom to Cushion Downside for Korean Stocks

BOK briefing to the National Assembly’s Strategy and Finance Committee

Shin Hyun-song, governor of the Bank of Korea, said strength in the semiconductor sector will continue for the time being and help limit downside pressure on South Korean stocks. The remarks rebutted concerns that an artificial-intelligence bubble and fears of a peak in chip stocks are driving the recent market selloff.

In a report submitted to the National Assembly’s Strategy and Finance Committee on July 29, Shin said domestic equities have undergone a steep correction amid worries about slowing AI investment and heavy net selling by foreign investors. Since May, large foreign net sales and a surge in leveraged investing have fueled repeated sharp swings in stock prices, he said.

Volatility has increased whenever issues such as investment and funding conditions at major US technology companies or rising interest rates in major economies come into focus, because domestic investor demand is concentrated in a small number of AI-related sectors. Going forward, the stock market will remain sensitive to external uncertainties including the outlook for the AI industry, shifts in monetary policy in major economies and global capital flows.

Still, Shin said a semiconductor supply shortage will continue to support the domestic stock market by extending the industry’s upcycle for now. Demand for computing power is rising as AI adoption spreads, while major technology companies continue investing to secure an early lead. At the same time, the high complexity of chip manufacturing is constraining any expansion in supply.

The global semiconductor cycle will remain in an expansion phase for a prolonged period as AI applications broaden into areas such as agentic AI and physical AI and related infrastructure investment increases, Shin said. Strong fundamentals, including expectations for large operating profits at semiconductor companies, will help limit downside pressure on domestic share prices.

Shim Sung-mi, Korea Economic Daily reporter smshim@hankyung.com