Trump's AI Deregulation Push Wavers After Democratic Landslide
In the U.S. midterm elections, a number of Democratic candidates who campaigned on restricting the construction of data centers—computer facilities that run large-scale artificial intelligence services—won their races. With control of Congress shifting to the Democrats, analysts say the Trump administration's push for AI deregulation could be stalled, and big tech companies are on high alert over data center restriction policies.
South Korea's semiconductor and power equipment industries, which have enjoyed the AI boom, are closely watching the possibility of an AI investment slowdown originating in the United States. Korea's economy is heavily dependent on semiconductors. In October, semiconductors accounted for 49.7% of exports—up 25.3 percentage points from a year earlier—taking up half of the total. The trade surplus that month stood at $8.8 billion, the largest on record for the period.
Concerns have been raised over how restrictions on data center construction could affect semiconductor demand and Korea's economic growth. The Bank of Korea projected growth of 2.9% for next year in its August economic outlook, while the Korea Development Institute (KDI) and the Ministry of Economy and Finance each forecast 2.2% in July. The International Monetary Fund (IMF) projected 2.8% last month, and the Organisation for Economic Co-operation and Development (OECD) announced 2.6% in September. None of these forecasts reflect the outcome of the U.S. midterms. The KDI is set to release its second-half economic outlook on the 18th, and the Bank of Korea will issue a revised outlook this month, both planning to examine scenario-by-scenario impacts depending on whether the regulations materialize.
Fears of a U.S.-driven AI investment slowdown are also adding uncertainty to government fiscal management. There are concerns that the Future Response Fund of President Lee Jae-myung's administration—which has accelerated large-scale investments with the goal of becoming one of the world's top three AI powers—could struggle to secure funding if the semiconductor downturn deepens.
Institutions' forecast revisions have been cited as a source of stock market volatility. The impact of the U.S. regulatory shift is growing across Korean industries, public finances, and the stock market as a whole.
