South Korea: Hot Money Runs Too Hot, While Industry Runs Cold

By Yuan Yin, reporting from Tokyo

The artificial intelligence boom has propelled South Korea’s semiconductor industry into a supercycle. In May 2026, the country’s exports reached a record monthly high of US$87.75 billion. In June, exports surged 70.9 percent year on year to US$102.25 billion, exceeding US$100 billion in a single month for the first time. South Korea thus became the fourth country in the world, after Germany, China and the United States, to achieve monthly exports of more than US$100 billion.

At the same time, however, apartment prices in Seoul have risen for 72 consecutive weeks. In the first half of this year, apartment transaction prices in Dongtan, Hwaseong, climbed by a cumulative 11.3 percent, the highest increase in South Korea.

Concerns are growing in the country that the benefits generated by the semiconductor boom are being transformed into housing anxiety for ordinary people.

A Semiconductor Bonanza Driven by the AI Boom

Semiconductors are the undisputed driving force behind South Korea’s export boom.In May, semiconductor exports reached US$37.16 billion, an increase of 169.4 percent from a year earlier. In June, they soared 199.5 percent year on year to US$44.82 billion, surpassing US$40 billion in a single month for the first time.

Memory chips performed particularly strongly. Exports of DRAM chips increased by 369.8 percent year on year, while NAND flash exports rose by 206.8 percent.

As exports repeatedly set new records, employees in South Korea’s semiconductor industry have emerged as the biggest beneficiaries.

According to South Korea’s JoongAng Ilbo, employees at Samsung Electronics and SK hynix have received performance bonuses worth hundreds of millions of won. Employees in Samsung Electronics’ memory-chip division reportedly received an average performance bonus of approximately 500 million won, equivalent to about 2.47 million yuan.

At the beginning of the year, SK hynix distributed a total of 4.72 trillion won in performance bonuses for 2025. The payments covered approximately 35,000 employees, averaging around 142 million won per person.Media reports have suggested that, for some employees in key positions at SK hynix, the combined value of one-off bonuses and stock incentives could reach even higher levels.

One married couple working in the industry reportedly said:

“There is a 500-million-won performance bonus waiting for us. Taking six months off would mean losing 250 million won. We simply cannot afford to take leave.”

Where the Hot Money Goes: Not into Industry, but Property and Luxury Goods

The money generated by the semiconductor boom has not flowed into the broader real economy or education. Instead, it has poured into property, luxury goods and other forms of high-end consumption.

Housing prices have surged.

Cities surrounding the factories of Samsung Electronics and SK hynix—including Yongin, Hwaseong, Pyeongtaek and Suwon—have become the focal points of the latest rise in South Korea’s property market.

Apartment prices in Seoul have increased for 72 consecutive weeks since the first week of February last year. In Dongtan, Hwaseong, apartment transaction prices rose by a cumulative 11.3 percent in the first half of this year, the highest increase in the country.

An 84-square-metre apartment in Dongtan has become one of the most striking examples. The property sold for approximately 1.5 billion won in September 2025. In early June this year, it changed hands for 2.225 billion won, equivalent to approximately 9.92 million yuan.

In less than a year, its price increased by more than 700 million won, or more than 3 million yuan.

According to the transaction-price database operated by South Korea’s Ministry of Land, Infrastructure and Transport, another 84-square-metre unit in the same residential complex sold for 998 million won at the end of May. Just two weeks later, the price of a comparable apartment had risen to 1.12 billion won.

In the second week of June alone, apartment prices in Dongtan jumped by 1.98 percent, the largest weekly increase recorded since 2021.

Dongtan has now exceeded the government’s threshold for property-market intervention. On July 1, the South Korean government designated it as a new regulated property area, together with Giheung District in Yongin and the city of Guri.

Luxury consumption has also surged.

Sales at one branch of Shinsegae Department Store increased by 16.2 percent year on year. Sales of jewellery and watches rose by 120 percent and 60 percent, respectively. Sales at Hyundai Department Store’s Pangyo branch increased by 44 percent.

A property agent said:“Every day, four or five groups of employees from major companies such as SK hynix and Samsung Electronics come to ask about buying property. The number of enquiries is two to three times higher than in previous years. Compared with just one month ago, asking prices for major apartment complexes have risen by nearly 200 million won.”

Imported-car dealerships have also been crowded with semiconductor employees.

A salesperson at one dealership said that workers who had received large performance bonuses often arrived saying that they wanted to consider “a model one level above the car they had originally planned to buy.”

The Other Side of the Boom: The Hotter Semiconductors Become, the Colder the Wider Economy Feels

The extraordinary prosperity of South Korea’s semiconductor industry highlights another side of the country’s economy—one marked by stagnation, weakness and growing division.

Youth unemployment remains high.

In April 2026, South Korea’s youth unemployment rate reached 7.1 percent, more than twice the overall unemployment rate. The employment rate among people aged between 15 and 29 fell by 1.6 percentage points year on year to 43.7 percent, marking a second consecutive annual decline.

Approximately 470,000 young people were officially classified as being in a “resting” or economically inactive state—neither employed nor actively looking for work.

Manufacturing jobs are also disappearing.

During 2025, South Korea’s manufacturing sector lost 73,000 jobs, the largest annual decline since 2019. At the same time, exports outside the semiconductor industry have stagnated. Automobile exports fell by 5.9 percent year on year in May.

A K-shaped economic divide is becoming increasingly apparent.

The average monthly income of South Korea’s highest-earning 20 percent of households exceeded 12 million won, or approximately US$8,018, for the first time. However, the income gap widened to 6.59 times, the highest level in six years.

Some economists argue that, once Samsung Electronics and SK hynix are excluded, most of South Korea’s remaining industries appear almost completely stagnant.

Small and medium-sized businesses are also facing a wave of closures.

In 2024, the number of business closures in South Korea exceeded one million for the first time, with “poor business conditions” cited as the main reason. Traditional manufacturing and construction companies are being squeezed simultaneously by the pressure to upgrade their technologies and the continued relocation of industrial capacity overseas.

A weakening won has added further pressure.

The currency’s depreciation has pushed up import prices. In June, consumer prices rose by 3.2 percent, the highest increase in two and a half years.Upward revisions to South Korea’s economic growth outlook have also increased pressure on the central bank to raise interest rates, potentially adding to the financial burden facing ordinary households.

The Danger of a One-Pillar Economy: When “Industry” Means Only Semiconductors

South Korea’s problem is not that it has no industrial economy. The problem is that its industrial economy has become overwhelmingly dependent on semiconductors.Semiconductors now account for 42.3 percent of South Korea’s total exports, up sharply from 24 percent one year earlier.

According to one think-tank analysis, if semiconductor and information and communications technology exports are excluded, South Korea’s export growth this year would amount to only 1.7 percent.Samsung Electronics and SK hynix alone have reportedly contributed approximately two-thirds of the country’s GDP growth.

Lee Taek-geun, a research fellow at the Hyundai Research Institute, warned:

“If exports surge while domestic demand fails to keep pace, an external shock—such as the end of the semiconductor supercycle—could cause the economy to stagnate. Policy support is urgently needed to revitalise the construction sector, create employment opportunities for young people and expand investment in artificial intelligence infrastructure.”

When an economy is supported by only one industrial pillar, the thicker that pillar becomes, the more dangerous the entire structure may be.

An official from South Korea’s Ministry of Trade, Industry and Energy acknowledged:

“When the May export figures were announced, we said that annual exports reaching US$1 trillion was not impossible. Based on last month’s export performance, that possibility has increased considerably.”Yet behind the impressive export figures, the risks associated with South Korea’s excessive reliance on a single semiconductor engine are becoming increasingly difficult to ignore.

The real problem, therefore, is not simply that the hot money is too hot. It is that the rest of the industrial economy is too cold.The brighter the semiconductor boom shines, the more clearly it exposes the weakness of South Korea’s other industries.