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Artificial intelligence (AI)-led demand is driving a strong upcycle in the semiconductor industry, with memory chips emerging as a key beneficiary of rising technology investments, according to a Jefferies report.
The report highlighted that the AI capex cycle has strengthened demand for semiconductors, particularly in Korea, where chip exports and production have become major drivers of economic growth. The report, said Koreas economy has become increasingly dependent on AI-related capital expenditure, with semiconductor manufacturing contributing significantly to recent growth. It noted that manufacturing of computers, electronics and optical products contributed 1.9 percentage points, or 51 per cent, to Koreas real GDP growth of 3.7 per cent year-on-year in the second quarter of 2026. The dependence on AI capex is even greater in the case of the Korean economy than in the US, the report said, underlining the importance of artificial intelligence infrastructure spending for the broader semiconductor ecosystem. According to Jefferies, semiconductor exports from Korea have surged amid strong AI-triggered chip demand, reflecting what it described as a semiconductor super cycle. The report said exports of semiconductors increased sharply, accounting for a record share of Koreas total exports. Exports of semiconductors soared by 193% YoY to US$133bn in the three months to August, accounting for a record 44% of total exports, the report said. It added that this represented a semiconductor super cycle. The report also highlighted the role of memory chips in the AI supply chain, noting that the strong demand environment has encouraged expansion in semiconductor manufacturing capacity. It said Korean memory companies are under pressure to increase production capacity amid favourable industry conditions. The result has been political pressure on the two big memory companies to announce increases in production capacity in Korea, Jefferies said. The report noted that the AI semiconductor boom has benefited segments linked to the picks and shovels theme, referring to companies providing critical infrastructure and components for the AI ecosystem. It said there was no sign as yet that the AI capex cycle is slowing, indicating continued momentum in demand for semiconductor-related sectors. The reports assessment suggests that the AI investment cycle could continue supporting semiconductor-related sectors globally, with memory chips, chip manufacturing capacity and supporting technology infrastructure positioned as key areas linked to the ongoing demand trend. (ANI)
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