AI chip demand lifts South Korea to strongest growth in years

South Korea’s economy grew by 1.8% in the first quarter amid continued demand for computer and memory chips driven by the artificial intelligence (AI) boom, central bank figures showed on Tuesday.

The quarterly rise in gross domestic product (GDP) was the strongest in five and a half years for the country, according to figures from the Bank of Korea in Seoul.

Growth was 0.1 percentage points higher than a preliminary estimate published in late April. Compared with the same period last year, South Korea’s GDP rose by 3.8%.

Asia’s fourth-largest economy is one of the world’s most important producers of computer chips.

The Bank of Korea recently raised its forecast for the current year and now expects the economy to grow by 2.6% in 2026. The International Monetary Fund expects growth of 1.9% for South Korea.

The figures suggest South Korea’s economy has so far remained resilient despite the conflict in the Middle East and the resulting energy crisis.

Like most East Asian economies, South Korea relies heavily on oil supplies passing through the largely closed Strait of Hormuz.