AI fuels Korea tech in 2026 as China squeezes steel, petrochemicals
South Korea's tech industries, particularly semiconductors and displays, are poised for strong growth in 2026, driven by surging global investment in AI infrastructure. Other sectors like batteries, bio, automobiles, shipbuilding, and textiles are expected to see moderate positive momentum. However, traditional industries including petrochemicals, steel, construction, and machinery will remain under pressure due to China's increasing manufacturing dominance and persistent trade uncertainties, according to a KCCI survey. This highlights a significant divergence in outlook for Korea's key economic sectors.
South Korea's economic outlook for 2026 presents a divided picture, with AI-driven technology sectors poised for strong growth while traditional heavy industries face significant headwinds, according to the Korea Chamber of Commerce and Industry's '2026 Industry Outlook.' Semiconductors and displays are designated 'clear' winners, with chip exports expected to reach $180 billion due to surging demand for high-bandwidth memory chips fueled by an anticipated $100 billion global investment in AI infrastructure. Display exports are also projected to increase, driven by OLED panels for automotive and extended-reality devices.Sectors rated 'mostly clear' include batteries, bio, automobiles, shipbuilding, and textiles, indicating moderate growth. Battery exports, for instance, are expected to rise, supported by demand from AI servers and a rebound in EV sales, although Chinese battery makers' growing market dominance poses a significant risk. Bio benefits from expanded manufacturing capacity, while automobile production and exports are supported by new EV plants, despite threats from Chinese automakers. Shipbuilding also anticipates growth in LNG carriers.Conversely, machinery, petrochemicals, steel, and construction are labeled 'cloudy.' Petrochemical exports are forecast to decline due to Chinese oversupply, and steel faces pressure from Chinese competition and import controls. Machinery exports are impacted by US tariff uncertainties, and construction struggles with high interest rates and rising costs. The KCCI emphasizes that China's rapidly strengthening manufacturing competitiveness is a primary challenge across many domestic industries, underscoring the critical need for AI-centered corporate experimentation and bold regulatory support.
