As bonuses from the semiconductor boom translate into increased spending, consumption in semiconductor beneficiary regions such as Icheon, Hwaseong, and Cheongju has risen by as much as 4% compared to non-beneficiary areas. From last year to June of this year, the cumulative increase in consumption reached 1.1 trillion won. If this trend continues, it is expected to grow to 1.7 trillion won by the end of the year.
Looking ahead to next year, the bonuses from Samsung Electronics and SK Hynix are projected to increase by about five times compared to this year, suggesting a greater ripple effect on consumption from the semiconductor sector. The Bank of Korea estimates that the consumption effects from the expanded semiconductor bonuses could raise next year’s GDP by 0.08% to 0.12%. Consequently, this is expected to boost the economic growth rate by 0.06% to 0.09% points.
The Bank of Korea's Research Department released these findings in an issue note titled 'How Will Consumption in Semiconductor Beneficiary Regions Change? An Analysis of Ripple Effects Using Regional Microdata' on August 31.
Using regional microdata, including card payment amounts by district, the Bank analyzed consumption changes in 'high-exposure semiconductor regions' like Icheon, Hwaseong, and Cheongju, where a significant proportion of semiconductor workers reside. The analysis focused on the consumption ripple effects from bonuses paid by Samsung Electronics and SK Hynix, excluding wage increases or asset effects from other IT companies.
The analysis estimated that since January 2025, monthly consumption in high-exposure semiconductor regions has been up to 4% higher than in non-exposure areas. In monetary terms, the cumulative increase in consumption from last year to June of this year is approximately 1.1 trillion won. If current consumption patterns persist, it is expected to expand to about 1.7 trillion won by the end of the year. The average annual increase in consumption is estimated at around 800 billion won, which is about 2% of last year’s increase in private consumption.
The consumption ripple rate, which indicates the proportion of bonuses that translate into actual spending, is estimated to be 27% for after-tax bonuses in 2025 and 21% in 2026. Compared to a scenario without the semiconductor boom, the increase in consumption is projected to raise GDP levels by 0.01% in 2025 and 0.03% in 2026.
Next year, the consumption ripple effect could be even greater. The Bank of Korea anticipates that the scale of bonus payments in 2027 will be about five times larger than this year, which could raise GDP levels by 0.08% to 0.12% based on the consumption ripple rate. This would translate to an increase in next year’s growth rate by 0.06% to 0.09% points. However, it is confirmed that this effect has already been reflected in the economic outlook released in August.
A key variable for enhancing future consumption ripple effects is the expansion of employment. Historical examples from the shipbuilding, steel, automotive, and chemical industries show that when the increase in total wages is more attributable to job growth rather than wage increases for existing employees, the consumption ripple effect is greater.
Lee Jae-ho, head of the Bank of Korea's Research Department, stated, "The demand for semiconductors is rapidly increasing, leading to an expansion of production capacity, and we expect employment to increase accordingly. According to recent data from the Korea Employment Information Service, semiconductor jobs are projected to grow by 5.1% in the second half of this year compared to the same period last year."
Park Chang-hyun, head of the Bank of Korea's Research Department, noted, "We can observe that the share of employment in total wages gradually increases after 2 to 3 years of a boom period. With investments in mega-projects and semiconductor clusters, we expect to see the employment growth effects from these investments."
The spread of consumption items will also be a variable influencing future ripple effects. So far, the increase in consumption in semiconductor beneficiary regions has been concentrated on high-priced discretionary items such as automobiles and department stores, limiting the 'consumption → income → consumption' virtuous cycle as increased spending has not significantly flowed back into the incomes of other households in the country.
The Bank of Korea anticipates that if consumption expands to various items, including services, the virtuous cycle effect will strengthen. Historical analysis shows that in Ulsan during the automotive and chemical booms, service consumption rapidly expanded after a lag following wage increases. However, such consumption expansion could also potentially reduce upward pressure on demand-side prices.
The Bank of Korea recommends that for the benefits of the semiconductor boom to spread throughout the economy, it is essential to strengthen the domestic industrial ecosystem, including materials, parts, and equipment, and to create conditions that allow increased income to flow smoothly back into consumption and the real economy.
* This article has been translated by AI.
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