But the boom comes with a cost for consumers. As memory makers devote more production capacity to the giant cloud operators and advanced processors driving the AI buildout, supplies for everyday electronics are tightening. The resulting price pressure has acquired a name: “chipflation.”
Its effects are becoming visible at Yongsan Electronics Market in central Seoul, where vendors barely glance up at the occasional customer.
“Window shopping is all we have these days,” one vendor said.
Once Korea’s undisputed mecca for electronics shopping, Yongsan helped nurture the market for the graphics chips that made Nvidia a household name. Jensen Huang visited its merchants to pitch the company’s early products long before becoming one of the most powerful figures in technology. Today, much of the market’s old bustle survives only in memory.
“Business is slow,” said the owner of a game shop. “Game consoles themselves have become so expensive. How can you expect people to keep coming?”
“Even the customers who do come mostly just look around and leave.”
The pressure on those shop counters begins far beyond Yongsan.
The rapid expansion of AI infrastructure has sent demand soaring for high-bandwidth memory and other data-center products.
Manufacturers are directing more advanced production capacity toward those markets, leaving consumer electronics makers competing for a tighter supply of memory.
Research firm TrendForce expects conventional DRAM contract prices to rise another 10 to 15 percent quarter-on-quarter in the fourth quarter, while NAND flash prices are forecast to increase 15 to 20 percent. Suppliers continue to favor high-performance server products as AI demand keeps the broader memory market undersupplied.
Morgan Stanley warned in June that this inflationary pressure was spreading beyond data centers into the wider economy. Electronics manufacturers face a familiar but increasingly difficult choice: absorb higher component costs or pass them on to customers who may decide to postpone a purchase.
For gamers, one of the most visible examples sits on Yongsan’s store shelves.
Sony’s standard PlayStation 5 now carries a recommended Korean retail price of 948,000 won, or about $700, compared with 628,000 won at its November 2020 launch. The digital edition costs 858,000 won, up from 498,000 won. The latest prices took effect May 1.
That puts the standard console’s price about 51 percent above its launch level and the digital edition more than 72 percent higher.
Sony attributed its latest increase to persistent pressure across the global economic environment. The company did not assign the increase solely to memory costs, but the price tags illustrate the growing expense of a hobby long associated with falling hardware costs and improving performance.
For Han Sang-il, a 31-year-old office worker who lives in Itaewon, the calculation has become personal.
Han regularly visits Yongsan during his lunch break to check game prices and consider whether to upgrade his PC. Increasingly, however, he comes to browse.
“Graphics cards have become so expensive, and consoles are expensive as well,” he said.
“AI has made some parts of life more convenient, but for someone like me whose hobby is gaming, it almost feels like bad news.
Technology is advancing so quickly, but it also feels like everything has become more expensive.”
Han increasingly buys used games, although even the secondhand market no longer feels particularly cheap. He hopes to replace his console ahead of a game’s release in November, but a PlayStation approaching 1 million won gives him pause.
“A PlayStation being around 1 million won is a burden,” he said. “So I end up mostly just looking.”
Merchants say that hesitation persists even when cheaper alternatives are available.
“We still bring in the new products even if there aren’t many people,” the game-shop owner said. “But even used products are something people hesitate to buy now.”
The rising cost of hardware comes as South Korea’s gaming industry is already losing some of its earlier momentum.
Industry revenue grew 3.9 percent to 23.85 trillion won in 2024, according to the Korea Creative Content Agency, or KOCCA. That was well below the 21.3 percent surge recorded in 2020. Overseas sales accounted for nearly half the total, at $8.5 billion.
At home, the gaming audience has also narrowed. A KOCCA survey found that 50.2 percent of South Koreans aged 10 to 69 played games last year, down from 74.4 percent in 2022.
For foreign visitors drawn by Yongsan’s reputation, the quiet can be as surprising as the prices.
Dominica Romaz, a 55-year-old homemaker from Mexico, came looking for a birthday present for her son, who had asked for a game console. She had heard Seoul had a huge electronics market and wanted to see it for herself.
A merchant typed prices into a calculator to bridge the language gap. Romaz said communication was manageable and she did not feel sellers were deliberately charging her more because she was a foreigner.
The prices themselves were another matter.
“I don’t think I’ll buy it in Korea,” she said.
Used game discs seemed more reasonable, with some selling for around $20 depending on the title. But an original Game Boy carrying a 180,000 won price tag surprised her.
So did the lack of shoppers.
“I expected there to be a lot of people,” Romaz said. “It was surprisingly clean and comfortable, but I was surprised that a place selling so
many things had so few people.”
Outside the gaming shops, merchants described much the same pattern.
“Everything is difficult these days,” said the owner of a store selling cameras, lenses and audio equipment. “People come, look, touch things and say they are interesting, and then leave.”
Weekends bring more foreign visitors, the merchant said, though their presence does not necessarily translate into sales.
“There are actually quite a lot of foreigners on weekends,” the owner said. “But rather than buying something, it feels like they come because Yongsan Electronics Market is big and famous. It feels more like sightseeing.”
“On weekdays, as you can see, it can be really empty. There are days when not even one person comes in.”
Yongsan’s troubles long predate the latest surge in memory prices. Online shopping steadily eroded its advantage as a place where customers could compare prices from store to store and assemble a computer component by component. Aging buildings and redevelopment have further unsettled the district.
There is a further irony in the market’s predicament: AI is also central to the plans for its revival.
In June, Yongsan district announced that Seoul had approved a development promotion plan covering 290,325 square meters around the electronics market. Approved in late May, the plan aims to cultivate AI and information and communications technology businesses through startup spaces, corporate support facilities and industry programs.
A separate project at the Najin Shopping Center’s buildings 17 and 18 aims to begin construction in 2027 and complete an AI and ICT business complex in 2030.
The district that once helped put graphics cards into Korean homes is preparing for a new role in the AI economy. For the merchants still behind its counters, the more immediate concern is whether the next visitor will buy anything.
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