South Korea's Chip Warning: Central Bank Says an AI Spending Slowdown Could Cost $100 Billion in Exports

SEOUL, South Korea — South Korea's semiconductor exports could fall by $50 billion to $100 billion compared with earlier forecasts if big American technology companies slow their spending on artificial intelligence next year, the country's central bank has warned. In a written response submitted to a lawmaker and reported by Reuters on 27 October 2026, the Bank of Korea modelled a pessimistic scenario in which a cooling of the AI investment boom hits the chip industry that now accounts for roughly half of all South Korean exports.

Illustration: Rows of glowing semiconductor fabrication equipment and silicon wafers inside a modern chip factory in South Korea.

What Happened

According to Reuters, the Bank of Korea (BOK) set out the scenario in a written answer to lawmaker Ahn Do-geol. Under the pessimistic case, a sudden shortfall in chip exports would shave approximately 0.4 percentage points off South Korea's gross domestic product growth next year, pushing the country's current account surplus well below the central bank's initial projection of $430 billion for 2027.

The scenario assumed a 10 per cent decline in Korean semiconductor unit prices. The warning lands at a moment when the AI boom has made South Korea's chipmakers central to the global technology economy: memory chips produced by Korean firms power the data centres on which AI systems are trained and run, and demand for those chips has surged alongside the spending of the largest US technology companies.

The central bank's own figures underline how fast that spending has grown. Combined capital expenditure by five major US technology firms — Amazon, Google, Microsoft, Meta and Oracle — rose from $40 billion last year to an estimated $80 billion this year, and is projected to reach $110 billion next year, according to the report cited by Reuters. The BOK's warning is therefore not about a slowdown that has already happened, but about what would follow if that extraordinary pace of investment were to falter.

Background

South Korea's dependence on chips is unusually deep. Semiconductors account for roughly half of the country's exports, which means that a swing in global chip demand translates quickly into national economic performance. When AI investment is booming, that concentration is a source of strength; when it cools, it becomes a vulnerability, and the central bank's scenario quantifies just how large that vulnerability could be.

The warning also reflects a broader anxiety running through financial markets in late October 2026. The AI boom has been financed by enormous capital spending, and investors have begun asking whether the returns on that spending will arrive fast enough to justify it. Meta's announcement on 26 October of a record equity raise to fund its AI expansion, reported by Reuters, showed that even the largest companies are tapping shareholders to keep the build-out going. At the same time, the Bank of Korea cautioned that considerable uncertainty remains over the trajectory of AI demand and the broader memory chip business cycle — a reminder that the memory market has historically moved in sharp boom-and-bust cycles.

That history matters. Memory chip prices have repeatedly surged when demand outstripped supply and then fallen steeply when new capacity came online or orders slowed. A 10 per cent price decline, the assumption at the heart of the central bank's pessimistic scenario, is well within the range of moves the industry has seen before. What makes the current moment different is the scale: with AI infrastructure spending now running at tens of billions of dollars a year, even a modest cooling would ripple through suppliers, exporters and national accounts.

Illustration: A vast data centre hall with rows of server racks and abstract artificial intelligence network nodes floating above.

Why It Matters

The warning matters for three reasons. First, it puts a number on a risk that has so far been discussed mostly in general terms. A $50 billion to $100 billion export shortfall and a 0.4 percentage point hit to growth are concrete enough for policymakers, investors and businesses to plan around, and they show that the AI boom is no longer just a technology story — it is a macroeconomic one for export-dependent economies.

Second, the scenario highlights how concentrated the AI supply chain has become. A handful of US buyers now drive a large share of global demand for advanced memory chips, and a handful of Korean suppliers meet much of that demand. When so much depends on so few decisions — the capital spending plans of five companies — the global economy inherits the volatility of those companies' investment cycles.

Third, the warning is a signal to other chip-exporting economies as well. Taiwan, Japan and others sit in similar positions in the AI supply chain, and a slowdown in US AI spending would not stop at South Korea's borders. The Bank of Korea's decision to publish its pessimistic scenario can be read as an early attempt to prepare markets and policymakers for a possibility that, until recently, few wanted to discuss while the boom was still accelerating.

What Happens Next

Whether the pessimistic scenario comes to pass will depend largely on what the big US technology companies say about their 2027 spending plans in the coming earnings season, and on whether AI revenues begin to catch up with AI investment. If spending keeps climbing toward the projected $110 billion, the central bank's warning will remain a contingency. If companies signal restraint, chip prices and export orders will be among the first places the cooling shows up.

Observers will also watch South Korea's own export data and the central bank's next forecasts for signs of softening. For now, the BOK has not changed its headline outlook — it has simply shown what the downside could look like. In a year when the AI boom has seemed unstoppable, that may be the most useful contribution of all: a reminder, with numbers attached, that booms end, and that the countries riding them should know the cost if this one does.

Illustration: The Seoul skyline at dusk with modern glass towers and a giant stylised computer chip above the city.

Sponsored: explore today's featured sponsored offers

FAQ

What did the Bank of Korea warn about?

South Korea's central bank warned that semiconductor exports could fall by $50 billion to $100 billion compared with earlier forecasts if major US technology firms slow their artificial intelligence spending next year.

How big would the economic impact be?

Under the bank's pessimistic scenario, the export shortfall would shave approximately 0.4 percentage points off South Korea's GDP growth next year and push its current account surplus well below the projected $430 billion for 2027.

What assumption sits behind the scenario?

The scenario assumed a 10 per cent decline in Korean semiconductor unit prices, alongside a slowdown in AI-related capital spending by major US technology firms.

Which companies' spending is involved?

The report cited combined capital expenditure by Amazon, Google, Microsoft, Meta and Oracle, rising from $40 billion last year to an estimated $80 billion this year and a projected $110 billion next year.

Has an AI spending slowdown already happened?

No. The Bank of Korea modelled a pessimistic scenario for next year; it cautioned that considerable uncertainty remains over AI demand and the memory chip business cycle, rather than declaring a slowdown under way.

Sources

• Reuters, "Bank of Korea warns country's chip exports could fall by up to $100 billion if AI spending slows," 27 October 2026.
• Reuters, "Meta launches $35 billion stock offering to fund AI expansion," 26 October 2026.