Semiconductor market to remain solid ‘at least through next year,’ South Korea finance minister says

Key points

• South Korea's finance minister said the semiconductor boom can last at least through next year.
• Chip stocks fell this week on rate hike worries and competition from Chinese companies.
• Lee said South Korea expects to collect more taxes than projected this year.

South Korean finance minister Lee Hyoung-Il said the semiconductor boom will last at least through 2027, speaking to CNBC on Saturday at the IMF-World Bank annual meetings in Bangkok. He said the gap between chip demand and supply remains very wide and supply is still being expanded.

His remarks followed a sharp fall in semiconductor stocks this week, driven by investor concerns over interest rate hikes and rising competition from Chinese companies. South Korean chip stocks including SK Hynix and Seoul Semiconductor fell in the sell-off, along with U.S. giant Nvidia.

Market swings and the economy

Lee said chip stocks have fueled volatility in South Korea's stock market this year, which he attributed to the semiconductor industry's larger share of the economy than in other countries. Despite the swings, he described South Korea's economy as "solid."

For now, our view is that we can sustain this growth at least through next year

— Lee Hyoung-Il

Warnings and tax revenue

On Thursday, an opinion column in Maeil Business Newspaper urged the government to prepare for a coming slowdown in the artificial intelligence boom. According to a CNBC translation, the author cited two experts who expect a "flood of new supply" of semiconductors that will turn the memory market "into a red ocean" by 2029.

Lee said the industry has also fueled tax growth, and the country expects to collect more taxes than initially projected this year. He added that South Korea will ultimately be in a stronger fiscal position because of the chip boom.