SEOUL, November 3 (AJP) — The AI revolution is moving at a speed that could make the Industrial Revolution look glacial. In South Korea, its shock waves are beginning to reach factory floors beyond the semiconductor cleanrooms that have long powered the country's industrial growth.
Chips remain a pillar of Korean manufacturing and exports, but the AI investment boom is beginning to lift production in other industries. The spillover is becoming more visible, although the recovery remains far from broad-based.
Semiconductor production surged 33.1 percent between 2022 and 2025, according to the Ministry of Data and Statistics. Excluding semiconductors, manufacturing output slipped 0.4 percent over the same period.
The comparison starts in 2022, avoiding both the pandemic shock in 2020 and the sharp reopening rebound in 2021.
That picture has begun to change this year.
Seasonally adjusted manufacturing production excluding semiconductors rose 3.3 percent in the third quarter from the previous three months, alongside a 6.8 percent increase in semiconductor output.
The pickup accelerated in September, when non-chip manufacturing output jumped 7.5 percent from August. The rebound partly reflected weak production a month earlier, however, and output was still 0.5 percent lower than a year earlier.
Factory utilization also improved, with the average manufacturing operating rate rising 5.6 percentage points to 76.8 percent in September.
The longer-term gap remains large. Overall manufacturing production increased 4.6 percent between 2022 and 2025 despite little growth outside semiconductors, underscoring how heavily chips drove the headline gain.
Recent business surveys suggest some of that strength is beginning to spread to other manufacturers.
"Higher production and investment in semiconductors, automobiles and shipbuilding benefited related manufacturers," Park Yong-min, head of the Bank of Korea's Economic Sentiment Survey Team, said after the central bank's October business survey.
The BOK's manufacturing composite business sentiment index rose 6.1 points to 105.6 in October. Smaller and domestic-oriented companies showed particularly strong improvement, helped partly by spillovers from major industries and lower raw-material import costs as the won strengthened.
The spread is also visible in production and investment data.
The Korea Development Institute (KDI) said in its October economic assessment that AI-related demand was supporting exports of steel products and nonferrous metals as well as semiconductors and computers.
Investment in machinery outside semiconductor equipment was also expanding, while output in related manufacturing industries continued to grow at a solid pace, the state-run think tank said.
The improvement is no longer confined to chip fabrication. Data centers and other AI infrastructure require machinery, electrical equipment, metals and power systems, drawing a wider range of manufacturers into the investment cycle.
But that expansion also exposes the limits of the recovery.
Much of the improvement outside semiconductors remains linked directly or indirectly to the same engine of growth: global investment in AI infrastructure.
"Korea's industrial competitiveness, excluding semiconductors, has already entered a period of stagnation or decline," Kwon Nam-hoon, president of the Korea Institute for Industrial Economics and Trade (KIET), said at an economic policy roundtable last month.
KIET's latest industry survey reflects a similar divide in expectations.
Its manufacturing outlook index for November stood at 102, barely above the 100 threshold separating optimism from pessimism. The semiconductor index, however, reached 159, compared with 97 for machinery and 95 for materials.
The gap does not mean the recovery outside chips is absent. September production and October business sentiment both show improvement reaching a wider range of industries than during the early stages of the semiconductor rebound.
What remains less convincing is whether the recovery has developed enough momentum to sustain itself beyond the AI investment boom.
Non-chip output is only beginning to recover after several years of stagnation, and many of the industries now gaining momentum remain tied to AI infrastructure, major exporters or their supply chains.
Korea has not yet moved beyond chip-led growth. But the circle of manufacturers benefiting from that growth is beginning to widen.
Copyright ⓒ Aju Press All rights reserved.