[Today’s Signal] Korea’s Chip Supercycle Is Repricing Capital

South Korea's semiconductor industry, particularly in artificial intelligence, is driving both the country's economic growth and interest-rate environment. Major players like Samsung Electronics and SK hynix have reported strong earnings, fueling capital spending and exports. The Bank of Korea responded to the robust economic momentum with a 25 basis point rate hike from 2.75% to 3.00% on August 27, raising its 2026 growth forecast to 3.3% and 2027 projection to 2.9%.

The surge in semiconductor exports, driven by demand for high-bandwidth memory and advanced packaging, is boosting earnings and propelling orders for equipment suppliers, production facilities, employment, tax receipts, and dividends. Nvidia, a key player in the AI infrastructure, reported a 106% increase in quarterly revenue to $96.2 billion and a 126% rise in net income to $59.7 billion.

The company projects further revenue growth of about 70% in the fiscal year ending in January 2028. Nvidia's growing financial role in the AI ecosystem, including investments in companies like Intel and CoreWeave, has earned it comparisons to a central bank for the AI economy. The semiconductor industry's expansion is evident in wage data, with average nominal monthly pay reaching 4.094 million won in June, up 3.1% from a year earlier.

However, real wages declined for the third consecutive month due to falling purchasing power. Employment figures show an uneven recovery, with regular employment rising by 78,000, while temporary and daily workers accounted for the majority of the job gains.