Semiconductor shares slide on rate, China concerns

Minister says South Korea's economic fundamentals remain solid

Deputy Prime Minister and Finance Minister Lee Hyung-il said the global semiconductor industry's boom will continue for at least another year, citing a persistent gap between demand and supply as production capacity keeps expanding.

Deputy Prime Minister and Finance Minister Lee Hyung-il meets with IMF First Deputy Managing Director Dan Katz at the Queen Sirikit National Convention Center in Bangkok, Thailand, on Saturday (local time). [Yonhap]
Deputy Prime Minister and Finance Minister Lee Hyung-il meets with IMF First Deputy Managing Director Dan Katz at the Queen Sirikit National Convention Center in Bangkok, Thailand, on Saturday (local time). [Yonhap]

Lee made the remarks in an interview during the IMF-World Bank Annual Meetings in Bangkok, Thailand, on Saturday (local time), according to CNBC.

"At this point, I think we can maintain this growth trajectory for at least next year," Lee said. "The gap between semiconductor demand and supply is still very large, and production capacity continues to expand."

The comments came as major semiconductor stocks at home and abroad fell amid concerns over potential interest rate hikes and intensifying competition from Chinese firms. Shares of SK hynix and Seoul Semiconductor, as well as US chipmaker Nvidia, have all weakened recently.

Lee said the semiconductor industry's outsized weight in South Korea's economy — larger than in most other countries — has amplified volatility in the domestic stock market this year. Even so, he said South Korea's economic fundamentals remain solid despite sharp swings in equities.

Lee added that the semiconductor sector has not only driven stock market volatility but also contributed to higher tax revenues. He projected that this year's tax intake would exceed initial forecasts, and said the semiconductor boom would further strengthen South Korea's fiscal position.

Meanwhile, CNBC also flagged warnings about a potential slowdown after the AI boom runs its course. The report highlighted concerns that a surge in semiconductor supply through 2029 could turn the memory chip market into a fiercely competitive "red ocean."


y2k@heraldcorp.com