"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

Analysis shows that in semiconductor high-exposure areas—where a large proportion of residents work in the semiconductor industry, particularly at Samsung Electronics and SK hynix—monthly consumption is up to 4% higher compared to other regions. The cumulative increase in consumer spending in these areas from last year through the end of this year is projected to reach about 1.7 trillion won, which, according to analysts, will boost the nation's gross domestic product (GDP) by 0.01% last year and 0.03% this year. Should year-end performance bonuses be paid out at levels projected to be about five times higher next year, it is expected to drive the GDP growth rate up by as much as 0.09 percentage points in 2025.

The Bank of Korea made these findings public in its BOK Issue Note released on August 31, titled "How Does Consumption Unfold in Semiconductor Beneficiary Regions: Ripple Effects Examined Through Local Microdata," co-authored by Hee-wan Jung and Jae-ho Lee.

The report analyzed credit card consumption patterns in "semiconductor beneficiary regions" such as Giheung-gu, Yongin; Hwaseong and Pyeongtaek; where Samsung Electronics operates, and Icheon and Heungdeok-gu, Cheongju, where SK hynix is located. Jae-ho Lee, Deputy Head of the Research Coordination Team at the Economic Statistics Department of the Bank of Korea, said, "By utilizing regional microdata and focusing on areas directly benefiting from the semiconductor boom, our analysis found that monthly consumption in these regions, especially on high-value discretionary goods like automobiles, home appliances, furniture, and department store products, has been up to 4% higher compared to other areas since performance bonuses were paid out in January of last year." The assessment is that the semiconductor boom has already had a significant positive effect on domestic consumption.

Lee further explained, "Our estimates only reflect the consumption ripple effect from performance bonuses at Samsung Electronics and SK hynix. Other factors, such as wage increases at other IT companies, asset effects, or government revenue increases, were not included in the figures." He continued, "When converting the consumption effect in high-exposure semiconductor areas—which have a large share of semiconductor employees among the adult population—into monetary terms, the cumulative increase in consumption is estimated at about 1.1 trillion won from last year through June this year. If current patterns continue, the cumulative increase from last year through the end of this year will likely reach approximately 1.7 trillion won." The annual average increase for 2025–2026 is projected to be 800 billion won, which is about 2% of last year's private consumption growth (4.3 trillion won).

The consumption ripple rate, measured as the consumption increase versus after-tax performance bonuses, is estimated at 27% for 2025 and 21% for 2026. Lee pointed out, "Although the figure dipped somewhat this year, compared to existing studies, it remains at a healthy level." He added, "Compared to a scenario without the semiconductor boom, this increase in consumption is estimated to have raised GDP by 0.01% last year and 0.03% this year." He continued, "Given that next year's performance bonuses are expected to be about five times larger than this year's, the effect on raising GDP could expand to between 0.08% and 0.12%." In this scenario, next year's growth rate would increase by 0.06 to 0.09 percentage points. Reflecting these projections, the Bank of Korea raised its growth outlook for 2024 and 2025 to 3.3% and 2.9%, respectively, in its economic outlook released on August 27.

The key question for future growth trends is whether the consumption-boosting effect observed in semiconductor beneficiary regions can be sustained and broadened. Lee commented, "The ripple effect of the boom can become stronger if the benefits extend beyond wage increases to employment growth, increased incomes are channeled more into consumption than asset markets, and the rise in consumption spreads across a wider array of goods."

With domestic companies ramping up production capacity in response to rising global semiconductor demand driven by artificial intelligence (AI), employment may also increase, potentially amplifying the consumption ripple effect. During the semiconductor boom of the 2010s, initial gains in corporate performance translated into worker compensation, but with large-scale expansions, employment contributions grew steadily. If increased income flows into consumption rather than the asset market, the ripple effect can be magnified. When SK hynix awarded similar performance bonuses, Cheongju exhibited a greater consumption response than Icheon—analysis suggests this is because a larger portion of the increased income in Cheongju was directed to consumption rather than the housing market.

There is growing expectation that over time, increased consumption will expand from high-value discretionary goods to a variety of sectors, including services, strengthening the virtuous cycle of consumption leading to income and in turn more consumption. Lee noted, "For the warmth of the semiconductor boom to permeate the broader economy, it is vital to reinforce the domestic industrial ecosystem—including materials, parts, and equipment—thereby increasing inter-industry linkages so that the semiconductor sector's successes can translate into broader job and production growth across industries." He also stressed the importance of facilitating increased income to flow smoothly into consumption and the real economy, rather than excessively into real estate. Lee added that support should be extended to vulnerable sectors such as small and medium-sized enterprises and low-income groups, to ensure that the rise in consumption spreads into high value-added, high employment-inducing areas, such as the service industry.

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