SEOUL, July 14: South Korea raised its 2026 growth forecast by one percentage point to three percent on Tuesday, buoyed by strong performances from memory chipmakers as artificial intelligence demand soars.
Record profits from semiconductor giants Samsung Electronics and SK hynix -- whose advanced memory chips are essential for the fast-evolving AI sector -- have fuelled optimism over the country's economic outlook.
The government has unveiled an ambitious economic agenda and has said it plans to invest an expected windfall from tech giants' taxes into public projects.
"We had initially projected this year's real economic growth rate at two percent, but we have now revised our forecast upward to three percent," Finance Minister Koo Yun-cheol told a cabinet meeting Tuesday.
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"Although exchange rate fluctuations could affect the outcome, per capita income is projected to remain around the $40,000 mark," Koo added.
In a presentation slide shown during the meeting, the finance ministry called the strong semiconductor market a "boon for the economic indicators".
However, an agile policy response is needed to address "changed economic situations including widening wealth polarisation", the slide said.
SK hynix and Samsung are involved in a public-private investment of 800 trillion won ($540 billion) to build a chip hub in southwest South Korea -- part of broader efforts to address regional inequality.
Tuesday's cabinet meeting also flagged high exchange rates, interest rates and consumer prices as risks amid the continuing Middle East conflict.
President Lee Jae Myung had said on Monday that higher tax revenues thanks to AI-driven profits were a "golden window" of opportunity to invest strategically.
The windfall will be used to establish a "future response fund" to concentrate investment in "future industries, youth, regional development, and education", Lee said, without giving further details.
The boom has also strengthened workers' demands for higher pay, with Samsung Electronics avoiding a major strike in May after reaching an agreement on bonuses.
Three companies dominate the market for producing advanced memory chips: US giant Micron, and South Korea's Samsung Electronics and SK hynix.
These chips, called high-bandwidth memory (HBM), are used in AI processors alongside powerful silicon known as GPUs to generate chatbot responses or realistic images.
