The U.S. Federal Reserve and many other central banks still treat artificial intelligence as a research-phase topic, but the Bank of Korea (BOK) has taken the global lead in deploying AI in live operations. However, the moment that will test its foresight has arrived far sooner than anticipated. As the AI boom fundamentally reshapes South Korea’s $1.9 trillion economy, the risk that conventional policy frameworks could become dysfunctional is beginning to surface.
In January 2026, the Bank of Korea introduced the world’s first machine learning model dedicated to central banking operations. The decision came before AI began violently shaking markets, laying the groundwork for the institution—whose mandate is price stability—to assume a new role of “real-time adaptation.” The question is whether the BOK, led by Governor Shin Hyun-song, can keep pace with this unprecedented technological revolution from a policy standpoint.
Even if Governor Shin asks OpenAI’s ChatGPT, Anthropic’s Claude, or the team’s internal AI model “BOKI” (Bank of Korea Intelligence) what happens next, no clear answer will come. AI tools have their limits, and in the world of 2026, there is no reliable “wise elder” to be found—not in Seoul, not in Washington, not in Frankfurt.
The global economy is engulfed in compounded turmoil to the point where the phrase “unprecedented” has become a cliché. The leader of the world’s largest economy has launched a tariff war against the entire world, conflict continues in the Middle East, China’s innovation machine keeps accelerating, and technologies with unproven profitability are driving stock prices to dizzying heights.
South Korea stands on the front lines of this chaos. Among the world’s top 15 economies, no country is being transformed by AI as rapidly. June exports surged 70.9% year-on-year, the highest growth since 1978, following a 53.4% increase in May. These staggering figures, driven by semiconductors, mirror neighboring Taiwan’s 51.7% export growth in May and approximately 13.7% GDP growth in the first quarter—its strongest since 1987.
The Bank of Korea of the past might have moved to raise interest rates to cool this exuberance. But the reality of 2026 is more complex. It is difficult to gauge how the blunt policy tool of the old-economy interest rate would affect a technology-led gold rush fueled primarily by overseas demand. A hasty rate hike could crush South Korea’s opportunity to become a true global leader, yet doing nothing risks leaving “irrational exuberance” unchecked. Even BOKI has yet to offer a clear prescription for this dilemma.
The AI boom is also rapidly exacerbating two major structural problems that South Korea has long faced. One is the extreme concentration of economic power in chaebols such as Samsung Electronics and SK Hynix. These giant conglomerates are the primary beneficiaries of AI-driven demand, and their influence only grows stronger as stock prices rise.
The other is soaring housing prices. Hefty bonuses paid to employees of AI-winning companies are pouring fresh fuel into what is already Asia’s most overheated real estate market. Household debt hit a record high at the end of 2025, with the average outstanding loan balance per borrower reaching approximately ₩97.2 million (approximately $65,296). Young people being priced out of Seoul’s housing market are increasing at a dangerous pace.
Wealth inequality is also severe. Although the KOSPI has fallen sharply from its all-time high above 9,000 reached in June, it remains 73% higher year-to-date. The fact that the Korea Exchange’s circuit breakers have been triggered 12 times in the past, with six of those concentrated this year alone, speaks to the market’s fragility.
Even under these circumstances, the Bank of Korea’s adaptation efforts deserve recognition. Governor Shin Hyun-song, who took office on April 21, is still in his early days, but his predecessor, Governor Rhee Chang-yong, steered through numerous crises during his tenure from 2022 to 2026, including the COVID-19 pandemic, trade wars, the president’s declaration of “emergency martial law,” and armed conflict in Iran. It was also Rhee’s achievement that the BOK partnered with domestic internet giant Naver to approve the development of its own AI model.
On the corporate side, meanwhile, AI-related capital strategies are entering a new phase.
SK Hynix completed a $26.5 billion American Depositary Receipt (ADR) offering at $149 per share, marking the largest-ever U.S. market listing by a foreign company. This move has raised hopes for breaking the “Korea discount” on corporate valuations, with ripple effects reaching rival Samsung Electronics. Market speculation emerged that Samsung Electronics was also considering an ADR offering, but a company representative denied this, stating the company is “not currently evaluating the possibility of issuing American Depositary Receipts.”
However, according to multiple sources, Samsung Electronics has explored ADR issuance in the past, and SK Hynix’s success has indeed prompted reconsideration. One source noted that “the company held preliminary discussions with several banks, but whether to proceed remains undecided, and they will monitor the highly volatile memory chip stock trends before making a judgment.” Should Samsung Electronics decide to pursue an ADR offering, its broad consumer electronics business and intermittent labor disputes could complicate the structuring of the transaction.
At present, memory chip stocks are undergoing a sharp correction. In the second week of July, SK Hynix fell more than 15% in a single day, while Samsung Electronics dropped over 10%. The KOSPI plunged roughly 9%, triggering a circuit breaker.
Yet, there is a strong chorus of voices viewing this plunge as a buying opportunity. Nico Rosti, senior analyst at MRM Research, noted that SK Hynix “has entered deeply oversold territory, and while further downside is possible, we see this as a significant opportunity to add aggressively.”
Nomura Securities has taken the most bullish stance, raising its target price for Samsung Electronics from ₩590,000 (approximately $396) to ₩670,000 (approximately $450), and for SK Hynix from ₩4 million (approximately $2,687) to ₩4.7 million (approximately $3,157). Both imply upside potential exceeding 100% from current levels. Nomura’s core logic is that AI has transformed memory chips from cyclical commodities for PCs and smartphones into long-term growth assets for data centers.
A report from Bank of America also suggests prolonged supply constraints. Its analysis that “new capacity additions in 2028 will be only one-sixth of the original plan” casts doubt on the feasibility of the South Korean government’s goal of “doubling production capacity by 2030.” SK Hynix CEO Kwak Noh-jung has also publicly stated that “the most severe memory shortage in industry history could occur in 2027,” expressing the view that demand for HBM, DRAM, and NAND will significantly outstrip supply beyond 2030.
The South Korean government has also placed AI semiconductors at the core of its national strategy. It plans to channel excess tax revenue generated by the AI boom into a “Future Response Fund,” prioritizing allocation to three major projects: semiconductors, AI data centers, and physical AI. Tax revenue in 2027 is expected to reach at least ₩500 trillion (approximately $335.9 billion), with the government aiming to compile its largest-ever budget exceeding ₩800 trillion (approximately $537.4 billion) to build a “positive feedback loop” that effectively lowers expansion costs for Samsung Electronics and SK Hynix through investments in power, land, R&D, talent development, advanced packaging, and regional infrastructure.
A SemiAnalysis report emphasized to “Be Greedy When Others Are Fearful,” forecasting that SK Hynix’s DRAM average selling price in the second quarter of 2026 will rise roughly 45% quarter-on-quarter, with operating profit reaching ₩55 trillion (approximately $36.9 billion). The operating margin is expected to hit a record high.
However, plans by Samsung Electronics and SK Hynix to each build two mega-scale memory fabs—with a total investment of ₩800 trillion (approximately $537.4 billion)—along with a ₩550 trillion (approximately $369.5 billion) AI data center investment plan by a consortium including Naver, also carry medium- to long-term oversupply risks. If the market begins to price in a “peak of the chip cycle,” current high valuations could collapse all at once.
Ultimately, South Korea is simply living, one step ahead, a future that other countries may eventually face. As AI fundamentally alters economic structures, whether the Bank of Korea can keep pace with the speed of that transformation through policy is not merely a question for South Korea alone. It is a microcosm of the challenge that the world’s central banks will confront in the near future.