"Samjeonnix Bonus-Driven Consumption Effect Expected to Boost Next Year's GDP by 0.09%"

“How Will Consumption Behave in Semiconductor Benefit Regions?”
Analyzing Spillover Effects Using Regional Microdata
Ensure Productive Circulation Into the Real Economy Rather Than Real Estate

Monthly consumption in high-exposure semiconductor regions—where employees of Samsung Electronics and SK hynix (collectively referred to as Samjeonnix) make up a large share of residents—was found to be up to 4% higher than in other regions. Cumulative consumption growth in these areas from last year through the end of this year is estimated to reach approximately 1.7 trillion won. It is projected that this will boost Korea's gross domestic product (GDP) by 0.01% last year and by 0.03% this year. With performance bonuses next year expected to be about five times larger than this year, next year’s GDP growth rate could rise by up to 0.09 percentage points.

The Bank of Korea announced these findings in the BOK Issue Note, "How Will Consumption Change in Semiconductor-Benefiting Regions: Regional Microdata Analysis of Spillover Effects" (authors: Heewan Jung and Jaeho Lee), published on August 31.

The report analyzed card spending in “semiconductor beneficiary regions” such as Giheung-gu in Yongin, Hwaseong, and Pyeongtaek—home to Samsung Electronics—and Icheon and Heungdeok-gu in Cheongju—home to SK hynix. Jaeho Lee, head of the Research and Survey Division at the Bank of Korea’s Economic Statistics Department, stated, “Analysis using regional microdata demonstrates that, since the payment of performance bonuses in January last year, monthly consumption in these regions—focused on high-value discretionary goods such as automobiles, home appliances and furniture, and department store merchandise—was up to 4% higher compared to other regions.” This suggests the semiconductor boom has already had a significant, positive impact on domestic consumption.

Lee further clarified, “These estimates reflect only the consumption spillover from performance bonuses at Samsung Electronics and SK hynix. The figures do not include effects from wage increases at other IT firms, asset effects, or expanded government revenues.” He added, “When converted to monetary terms, the cumulative increase in consumption in high-exposure semiconductor areas with high proportions of relevant workers among the adult population was about 1.1 trillion won from last year to June this year. If this trend continues, the cumulative increase in consumption through the end of this year will likely hit 1.7 trillion won.” The projected annual average increase for 2025–2026 is around 800 billion won, equivalent to 2% of last year’s private consumption growth of 4.3 trillion won.

The consumption spillover rate, measured by the increase in consumption relative to post-tax performance bonuses, is estimated at 27% in 2025 and 21% in 2026. Lee noted, “While the rate dipped somewhat this year, it is still favorable compared to previous studies. This increase in consumption is estimated to have boosted GDP by 0.01% last year and by 0.03% this year compared to a scenario without a semiconductor boom.” He also observed, “Given that next year’s performance bonuses are expected to be about five times as large—meaning a significant increase in bonus size—the effect on GDP is likely to expand to 0.08–0.12%.” This would contribute 0.06–0.09 percentage points to next year’s growth rate. The Bank of Korea previously factored these impacts into its economic outlook released on August 27, raising growth projections for this year and next to 3.3% and 2.9%, respectively.

Looking ahead, the key question is whether the increase in consumption seen in semiconductor-benefiting regions will continue and spread more widely. Lee stated, “If the benefits of the boom extend beyond wage increases to drive job creation, if increased income flows into consumption (rather than asset markets), and if consumption growth expands into a wider range of goods, then the spillover effect could strengthen even further.”

As global demand for semiconductors rises with the spread of artificial intelligence (AI), Korean companies are expanding production capacity faster—likely driving future job growth and amplifying the consumption spillover effect. During the 2010s semiconductor boom, improvements in company performance initially led to higher employee compensation, and then, with large-scale capacity expansion, job contributions began to increase. If more of the additional income flows into consumption rather than asset markets, the spillover effect could be amplified. For example, after a similar performance bonus “shock” at SK hynix, the consumption response in Cheongju was even greater than in Icheon, apparently because a higher share of the increased income in Cheongju went to consumption instead of the housing market.

As consumption gradually spreads from high-value discretionary goods into services and other sectors, the positive feedback loop of consumption leading to income, which then leads to more consumption, is also expected to strengthen. This would allow the gains from the semiconductor boom to benefit a broader range of households. Lee added, “For the warmth of the semiconductor boom to spread across the wider economy, the sector’s strong results must translate into job and production growth in other industries. To achieve this, it’s crucial to strengthen the domestic industrial ecosystem encompassing materials, components, and equipment, and to enhance inter-industry linkages.” He also emphasized the need for conditions that allow increased income to flow smoothly into consumption and the real economy, rather than being concentrated in real estate. It is important to provide support for vulnerable groups—such as small and medium-sized enterprises and low-income households—so that consumption spreads into segments of the economy with high added value and job creation, such as the service sector.

This content was produced with the assistance of AI translation services.