Chip upcycle, easing oil-related pressures to boost consumption in 2027: KDI

The global semiconductor industry is set to experience an upturn, potentially boosting consumption by 2027, according to a projection from South Korea's leading think tank, the Korea Development Institute (KDI). This outlook takes into account the easing of pressure from soaring oil prices, which have previously hampered domestic spending.

The current global chip upcycle, primarily fueled by the artificial intelligence (AI) revolution, has thus far had a modest effect on domestic consumption. This is due to the gradual dissemination of its advantages over time. However, as the positive impact of the chip upcycle expands in the coming year, it is anticipated to surpass the current year's levels and contribute to stronger consumption.

The KDI's report suggests that bonuses and dividends disbursed by prominent chipmakers could further stimulate domestic consumption. Nonetheless, geopolitical uncertainties in the Middle East might introduce some risks to this positive trend. In light of these potential challenges, the KDI advises the government to avoid implementing measures that aim to spur short-term spending. Instead, it recommends focusing on enhancing long-term economic growth and stability.