South Korea

Intelligence for Better Decision Making

Bank of Korea and Naver Launch Sovereign AI Platform for Secure Financial Analysis

Jan. 22, 2026 | Financial System

South Korea’s central bank and technology giant Naver have launched a sovereign AI platform tailored to finance and economics.

**The Bank of Korea partnered with Naver Corp to develop and deploy BOKI (Bank Of Korea Intelligence), a generative AI system specialized in financial and economic analysis.**
Unveiled at the January 2026 Bank of Korea–Naver Joint AX Conference, BOKI represents the world’s first sovereign AI platform operating within a central bank’s live working environment.

**Bank of Korea engineers built BOKI entirely within the institution’s internal network, isolating it on-premises to prevent data leakage and comply with strict national security guidelines.**
Naver Cloud contributed the cloud infrastructure, large language models and technical support, while the Bank’s personnel manage application development and day-to-day operations. All AI training and inference occur within this closed network to ensure data remains secure.

**BOKI offers five core functions that align with the Bank’s mission: document search and summarization, Q&A assistance, translation of official publications, economic issue analysis and data-driven decision-making.**
The platform also features law and regulation checks and an internal work chatbot designed to streamline workflows.

**After launching initial digital technology initiatives in 2020, the Bank commenced full-scale development of BOKI in 2024.**
Following rigorous internal testing and standardization, the Bank initiated BOKI’s first operational rollout in early 2026.

**Governor Lee Chang-yong emphasized the need for a sovereign AI system that understands Korea’s financial history, institutional frameworks and cultural context.**
He warned that current network separation policies—which forbid cloud-based internet access for critical institutions—hinder large-scale AI deployment and called for regulatory reforms to accommodate significant computing demands.

**Anticipating regulatory changes by March 2026, the Bank is reclassifying around 1.4 million internal documents into AI-readable formats, preparing a new national network security system and evaluating advanced security technologies.**
These steps will allow BOKI’s capabilities to expand once network separation rules are relaxed.

**Naver Cloud plans to apply lessons learned from BOKI to accelerate AI transformation across other high-security public and financial sectors.**
CEO Kim Yoo-won pointed to this project as a global example of deploying AI under stringent central bank security conditions and pledged continued support to strengthen AI infrastructure throughout South Korea’s industries.

Surging Semiconductor Demand Fuels Price Increases, Export Growth, and Production Expansion

Jan. 22, 2026 | Firms

Strong global demand for semiconductors is driving increases in prices, exports, and production capacities.

**Producer prices in South Korea rose 0.4 percent month-on-month in December 2025, marking the fourth consecutive increase since September.**
Semiconductor costs led the gain, with prices in the computers, electronics, and optical equipment category climbing 2.3 percent. Flash memory jumped 6.0 percent and DRAM semiconductors surged 15.1 percent, while industrial goods overall added 0.4 percent, pushing up the headline index.

**Bank of Korea data show both the Domestic Supply Price Index and the Total Output Price Index rising 0.4 percent in December 2025, indicating that domestic and export sectors contributed equally to price pressures.**
BOK officials say the extent to which producer price increases pass through to consumer prices will depend on company pricing strategies, prevailing business conditions, and government inflation measures. They also advise monitoring falling global oil prices for potential offsetting effects on inflation.

**The semiconductor industry has entered a “hyper bull” phase fueled by robust demand for memory chips, especially from expanding AI server deployments.**
Counterpoint Research projects memory chip prices could rise 40 to 50 percent quarter-on-quarter in early 2026, possibly surpassing the 2018 peak. Experts attribute current shortages—particularly in general-purpose DRAM—to a structural shift as manufacturers focus on high-bandwidth memory expansion.

**Major producers are responding by boosting capacity.**
Micron Technology plans to acquire Powerchip Semiconductor’s P5 fabrication plant in Taiwan for $1.8 billion, aiming to accelerate DRAM output by mid-2027. This approach should alleviate memory chip shortages faster than building new facilities, which typically require over five years to come online.

**South Korea’s leading memory firms are expanding as well.**
SK hynix is developing its Yongin semiconductor cluster, slated to begin operations in February 2027, and has already started HBM production at its M15X plant. Samsung Electronics is constructing its P4 and P5 fabs with a target of full operation by 2028. Both companies are evaluating US fab investments estimated between $67 billion and $81 billion for 2027–2030, aiming to sidestep potential tariffs despite only about 8 percent of Korean semiconductor exports going directly to the United States.

**In Japan, Advantest—a semiconductor inspection equipment maker—has seen its share price triple over two years to around ¥22,000 as of January 2026, with a market capitalization of ¥16.46 trillion.**
The company commands an estimated 60–70 percent share of the HBM tester market and holds a near-monopoly on AI accelerator inspection systems. Its testers validate next-generation GPUs from NVIDIA and AMD as well as memory products from Samsung, SK hynix, and Micron. Advantest plans to boost production capacity by more than 70 percent by the end of 2026, and global investment banks forecast operating profits exceeding ¥350 billion for that year.

**South Korea’s export performance in January 2026 underscored the semiconductor sector’s key role in the economy.**
In the first 20 days of the month, total exports rose 14.9 percent year-on-year to $36.36 billion, driven by a 70.2 percent surge in semiconductor shipments to $10.73 billion, which accounted for 29.5 percent of all exports. Exports to China climbed 30.2 percent to $8.45 billion, and shipments to the United States grew 19.3 percent to $6.66 billion despite existing tariffs. Imports over the same period increased 4.2 percent to $36.98 billion, resulting in a $600 million trade deficit. In December 2025, exports expanded 13.4 percent year-on-year to $69.6 billion—marking the 11th consecutive month of growth—and annual exports for 2025 reached a record $709.7 billion.

### IMPACT ANALYSIS
**From this Development, various impacts could cascade through the system, to a lesser or greater extent, depending on the severity and criticality of the shocks.**

Domain	Causal Chain	Possible Outcome
Macroeconomics & Growth	(Semiconductor export boom ↑ → Terms-of-trade index ↑ → Current-account balance (% GDP) ↑ → Potential GDP growth revision ↑ → Real GDP growth ↑)	The enhanced terms of trade and external surpluses will underpin upward revisions to potential output and drive stronger real GDP growth.
Macroeconomics & Growth	(Memory chip price surge ↑ → Import-price pass-through ↑ → Headline CPI/Core CPI ↑ → Inflation volatility ↑ → Inflation-targeting credibility ↓)	Rising import-price pass-through and inflation volatility may erode confidence in the central bank’s ability to keep inflation near its 2 percent target.
Competitiveness	(Semiconductor export boom ↑ → Trade-openness & preferential access ↑ → Real export market-share change ↑ → High-value-added export share ↑ → Total-factor productivity level vs frontier ↑)	Greater preferential access and high-value trade gains will accelerate productivity convergence toward the global frontier.
Macroeconomics & Growth	(DRAM price surge–driven profits ↑ → Capital-formation rate ↑ → Business fixed-investment growth deviation ↑ → Private fixed-investment growth ↑ → Potential GDP growth revision ↑)	Surging profits will finance elevated business investment, prompting analysts to hike potential GDP growth estimates.
Macroeconomics & Growth	(Memory chip price surge ↑ → Global-value-chain reconfiguration velocity ↑ → FDI net inflow (% GDP) ↑ → Foreign-owned green-field project count ↑)	Accelerated value-chain shifts will draw substantial FDI and increase foreign-owned greenfield semiconductor projects.
Firms	(South Korean PPI inflation ↑ → Supply-chain restructuring cadence ↑ → Supplier-delivery-times index ↓ → End-to-end supply-chain lead-time deviation ↓ → Capacity-utilisation in manufacturing ↑)	Faster supply-chain restructuring and reduced lead-time variability will boost manufacturing capacity utilization.
Technology & Innovation	(Strategic-sector export risk ↑ → Dual-use export-control restrictiveness ↑ → Semiconductor fab utilisation rate ↓ → AI inference cost index shift ↑ → AI adoption GDP uplift ↓)	Tighter export controls will reduce fab utilization, raise AI inference costs, and dampen AI-driven GDP gains.

### BOTTOM LINE

- Robust AI-server demand has driven a pronounced memory-price cycle—general-purpose DRAM is projected to rise 40–50 percent quarter‑on‑quarter in early 2026—which has already lifted South Korean producer prices for four months and increases the likelihood of pass-through into consumer inflation unless firms absorb costs or falling oil prices offset the effect.

- The 70.2 percent year‑on‑year surge in semiconductor exports in early January 2026, which made semiconductors 29.5 percent of exports in the period, will materially improve South Korea’s terms of trade and current‑account receipts and is likely to justify upward revisions to potential GDP and stronger near‑term real growth if export strength persists beyond cyclical inventory adjustments.

- Elevated memory prices have translated into outsized cash flow for producers, which is accelerating capacity expansion via faster routes such as M&A (Micron’s $1.8 billion P5 acquisition) and large greenfield builds (SK hynix Yongin, Samsung P4/P5), and these actions should begin to relieve shortages by mid‑2027 to 2028, exerting downward pressure on prices over a 12–24 month horizon.

- Because acquisitions and new fabs take time to raise output, the market is likely to remain tight and price‑volatile through most of 2026, sustaining producer‑price pressures and complicating the Bank of Korea’s policy trade‑offs between containing inflation and supporting growth from the export boom.

- Firms across semiconductor supply chains are already shortening supplier lead times and raising capacity utilization, which will increase manufacturing investment and capital formation, tighten upstream markets for equipment and materials, and improve end‑to‑end reliability even as costs remain elevated.

- Tighter export controls or wider dual‑use restrictions would slow the flow of specialized equipment and materials, reduce fab utilization, raise unit costs for advanced memory production, and could slow global AI deployment by increasing AI inference costs and reducing downstream adoption rates.

- Equipment and testing suppliers are capturing disproportionate gains from the cycle—Advantest’s tripled share price and planned >70 percent capacity increase through 2026 demonstrate that test‑equipment makers and suppliers will continue to benefit and attract investment and talent over the next 12–18 months.

- The cycle is prompting value‑chain reconfiguration and potential US‑based investments (Korean firms evaluating $67–81 billion in US fabs for 2027–2030), which will increase FDI and diversify production footprints but will be costly and slower to deliver than near‑term capacity relief achieved through acquisitions and existing expansions.

- Policymakers and central bankers should monitor corporate pricing strategies, oil‑price trajectories, and the pace of announced capacity coming online, and consider targeted fiscal or regulatory measures (capex incentives, temporary subsidies, or macroprudential tools) to smooth consumer‑price effects while preserving incentives for private investment in domestic semiconductor capacity.

- Procurement and downstream firms should plan for sustained higher electronic‑input costs through 2026 by locking supply contracts, using hedges or pass‑through clauses, and exploring strategic partnerships or localized sourcing to mitigate exposure and secure long‑lead components.

Monitored Intelligence for South Korea - Jan. 23, 2026

News
Media
257

Government
Releases
17

City/State
Releases
24

Embassy
Releases
0

Foreign
Service
Advisories
0

Academic/
Think
Tank
3

Podcasts
0

Videos
0

Social
Media
0

Business
Releases
0

Erudite Risk takes an all risks approach to intelligence reporting. We categorize key intelligence into one of 40 different risk intelligence categories.

The goal is to provide intelligence that allows decision makers to avoid being blindsided by what they may have missed, while informing them to make better decisions as well.

Risk Categories Reported on Today

Risk Category

Items Reported On

North Korea

Political Scandal or Corruption

Corporate Corruption or Fraud

Supply Chain Issues

Critical Infrastructure Failure

Crime

Extreme Weather Events

Shifting Geopolitical Alliances

Regulation

Geopolitical Conflict and Disputes

Accidents

Pollution

Natural Disasters

Privacy

Communal and Religious Strife

Epidemics and Pandemics

Regulatory Enforcement Actions

Erudite Risk also includes operations categories so you can monitor the environment for better decision making. Everything is tied together--what happens in risk affects operations and what happens in the market impacts risk profiles.

We categorize key intelligence into one of 30 different operations intelligence categories.

Different roles and functions within the organization can monitor different key issue areas. HR may monitor employment, wages, regulations, labor and management relations, etc., while P&L leaders may monitor overall developing trends.

Operations Categories Reported on Today

Operations Category

Items Reported On

Bizdev-Partnering

Inflation

Trade Issues and Numbers

Operating Results

Asset Price Change

Mergers & Acquisitions

Economic Growth

Employment

Tech Development/Adoption

Political Policy Resistance

Legal Exposure

Initiative

Real Estate

Politics and Elections

Budgets-Budgeting

South Korea to seek consultation with UNC over push to reopen border trails inside DMZ

Joongang Ilbo | English | News | Jan. 23, 2026 | Geopolitical Conflict and Disputes

South Korea's Ministry of Unification announced plans to consult with the U.N. Command (UNC) regarding its initiative to reopen three previously closed sections of the DMZ Peace Trail within the Demilitarized Zone (DMZ). The DMZ Peace Trail, launched in 2019, consists of 11 routes near border cities such as Gimpo, Paju, and Yeoncheon, providing public access to areas typically restricted due to security concerns.

Three trail sectors located in Paju, Cheorwon, and Goseong were closed in April 2024 amid heightened tensions with North Korea. Unification Minister Chung Dong-young recently visited the closed Goseong trail segment, reaffirming the government's commitment to restoring full public access within 2026 as part of efforts to rebuild trust with North Korea under President Lee Jae Myung’s administration.

The restoration plan is expected to encounter challenges from the U.S.-led UNC, which oversees the DMZ under the Korean War armistice agreement and enforces security on behalf of South Korea. The unification ministry maintains that the armistice, being military in nature, should not impede peaceful activities like the reopening of the trails and aims to progress the plan through dialogue with the UNC.

Labor Market Imbalances and Immigration Policies

Korea Institute for International Economic Policy | English | AcademicThink | Jan. 23, 2026 | UndeterminedEmployment

South Korea is experiencing rapid demographic decline due to ultra-low fertility and accelerated aging, with its population projected to fall below 40 million by 2065. This demographic shift is intensifying labor market imbalances, with labor shortages expected to grow significantly across various sectors such as ICT services, healthcare, logistics, hospitality, and agriculture. Geopolitical tensions and technological advancements have further exacerbated these shortages, especially in high-tech industries. As a result, attracting foreign labor, both skilled and unskilled, is increasingly considered essential to alleviate workforce gaps, although challenges related to immigration policy rigidity and social consequences remain.

Empirical analysis of the European Union’s free labor movement regime revealed that increasing the share of immigrants reduces labor market tightness, with a 1 percentage point rise in immigrant share leading to a 10% decrease in labor market tightness. Low-skilled immigrants contributed to short-term employment increases, while high-skilled immigrants supported long-term growth in services. Some short-term adverse effects, including increased unemployment among low-skilled natives, were also observed. A parallel analysis of Korea’s expanded Employment Permit System (EPS), which increased foreign labor especially post-COVID, showed a reduction in labor shortages with a lag of about one year. However, no improvements in labor productivity were detected, indicating a need for policy adjustments such as allowing longer-term stays for foreign workers.

Policy recommendations include refining labor shortage assessments with more detailed, sector-specific data and improving immigration data integration for better policy analysis. Visa frameworks should be simplified into tier-based categories to enhance flexibility and support longer-term labor participation with pathways to settlement. Enhanced job matching through digital platforms and AI tools, along with stronger governance to prevent unfair practices, is advised. Finally, strengthening stay management and training systems for foreign workers—through digitalized monitoring, language instruction, vocational education, and workplace safety training—is recommended to improve productivity and workplace integration.

"물류는 매일 바뀐다…유연한 로봇 자동화가 답"

Logistics Change Daily… Flexible Robotic Automation Is the Answer

ZD Net Korea | Local Language | News | Jan. 23, 2026 | Supply Chain Issues

CJ Logistics is extensively implementing a "physical AI" strategy that integrates artificial intelligence, robotics, and simulation to address the dynamic and complex nature of logistics environments. Goo Seong-yong, head of automation development, highlighted that unlike manufacturing, logistics requires flexible use of space and the handling of varying product types throughout the day, which renders traditional fixed automation equipment like conveyors inadequate. The company is therefore focusing on robot-based automation that offers mobility and adaptability.

At e-commerce fulfillment centers such as the Incheon GDC, CJ Logistics has introduced mobile palletizers capable of handling multiple types of boxes in random order, enabled by reinforcement learning-based simulations. Similarly, a random piece-picking robot was deployed at the "The Market" center in Dongtan to manage about 300 product types using improved AI segmentation models, significantly reducing development time through virtual simulation environments.

CJ Logistics prioritizes development speed as a competitive edge, aiming to complete the transition from line construction to operation within three months post-contract. To achieve this, all robot and AI development is based on the Robot Operating System (ROS), with a significant proportion of internal developers trained accordingly. The company leverages virtual data generation and simulation to overcome challenges related to frequent changes in box designs, enabling rapid adaptation within hours.

Further innovation includes a vision-language-action (VLA) model using a dual-arm robot, developed in collaboration with ROBOTIS, which demonstrated quick deployment capabilities. Goo emphasized that despite perceptions of high AI costs, well-trained models can substantially reduce on-site development costs and time, proving cost-effectiveness in logistics automation. He also noted that ROS has unified robotics technology for 18 years and is expected to accelerate change in the logistics sector over the next 5 to 10 years.

Try the Daily Briefing

Try the Daily Briefing for your country of choice for two weeks--free of charge and with no obligation.

Have a service or subscription question? We'd be happy to hear from you.

How can we help?

Full Name:

Email Address:

Type of Inquiry:

Country of Interest:

Contact us for a free trial of the Daily Briefing for your country of choice.

We currently cover:

South Korea
Japan
China
Taiwan
Vietnam
India

info@eruditerisk.com

The Daily Briefing is delivered Monday through Thursday via email.

Each day's reports include a combination of:

Takes
Takes are our deep dives into a topic of enduring interest or concern. Takes include copious references to all the media resources we gathered to build them.

Developments
Developments are key issues and incidents being heavily reported on in country. These are the centers of local thought gravity around which everything else revolves.

Risk Media
Summaries and analysis of the most important risk issues reported on in media, arranged by risk category. Learn about risk trends and issues while they are developing--before they blow up.

Ops Media
Summaries and analysis of the most important operational issues reported on in media, arranged by operations category. See what's changing in your market, and what's not.

Government Releases
Government press and data releases on key economic data, regulation, law, intiatives, incidents. Straight from the government's press to your eyes in less than a day.

Embassy and Business Association Releases
Statements and news releases from foreign embassies and business/industry associations, including chambers of commerce.

The Daily Briefing is comprehensive!

The Daily Briefing can run 50-100 pages each day!

Luckily, Erudite Risk tailors every report specifically to you.

Content Filtering
We try hard to ensure that every piece of information included in each day's reports will be of interest to our readers.

To fulfill our goal of comprehensively monitoring the intelligence landscape and also keeping reports readable, we build big reports--then deliver only the information that applies to you.

Each Daily Briefing is a bespoke report matched to your concerns. Tell us what you want in it, or we can match it to your professional needs. It's that easy.