Fueled by the artificial intelligence (AI) boom, the economies of Korea and Taiwan are posting record growth, but some say the benefits are concentrated in the semiconductor industry, deepening polarization across the broader economy.
On the 24th, the New York Times (NYT) reported that Korea and Taiwan are leading production of semiconductors, a core component of the AI industry, boosting exports and stock markets, but industries other than semiconductors and ordinary households are still struggling. The NYT analyzed that a "K-shaped polarization," in which only some industries grow while the rest stagnate, is emerging.
The NYT said Samsung Electronics and SK hynix in Korea are dominating the high bandwidth memory (HBM) market and are among the biggest beneficiaries of rising AI demand. Since the start of the year, Samsung Electronics' share price has more than doubled, and SK hynix's share price has risen nearly threefold. Buoyed by a surge in semiconductor exports, the Bank of Korea also raised its economic growth outlook.
However, the NYT noted that the semiconductor boom has not spread across the wider economy. In particular, key manufacturing sectors such as petrochemicals, steel, batteries and auto parts are facing intensifying competition with Chinese companies and weakening demand.
Yun Sang-ha, head of international macro-finance at the Korea Institute for International Economic Policy (KIEP), told the NYT, "Saying the Korean economy is doing well also means that only a very limited area is doing well." He added, "For workers outside the AI industry, what they feel in reality may be rising prices and stagnant real wages."
The NYT reported that as the gains from the AI boom in Korea concentrate on some corporations and investors, the stock market is becoming increasingly lopsided. According to Toss Securities, about 83% of net KOSPI purchases by individual investors this year have been concentrated in Samsung Electronics and SK hynix.
The NYT said some older people in Korea are investing retirement pensions and canceled insurance payouts in semiconductor stocks. It also reported that younger people are posting on social media asking "whether there is any point in having a job," saying they can earn similar or more money through stock investing alone.
Taiwan is in a similar situation. TSMC, the world's largest foundry, is posting record results on the back of rising demand for AI Semiconductor chips, but traditional manufacturers are struggling with tariff issues and weak demand. Taiwan's economy grew by nearly 15% in the first quarter of this year, but many workers' wages are said to be flat.
The NYT reported that as the AI boom continues, conflicts over profit distribution are also growing. In Korea, the Samsung Electronics labor union has announced a strike demanding bigger performance bonuses, and in Taiwan, TSMC's performance bonus policy came under scrutiny at the shareholders meeting.
The NYT analyzed that if the vast added value created by AI concentrates in a few corporations and shareholders, polarization in the Korean and Taiwanese economies could deepen further. It added, "The rapid growth in Korea and Taiwan stems from narrow, specialized industries that employ only a very small share of the population," and "people outside the semiconductor industry are struggling to find ways to enjoy those benefits."