South Korea is an important country in global chip manufacturing but recently has faced a decline in demand, increased inventory, increased competition and other difficulties. The data released by the Korea Statistics Office on Friday showed that South Korea’s semiconductor production in February fell 17.1% from a year earlier, the largest decline in more than 14 years.
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Data show that semiconductor production fell 17.1% in February, the largest year-over-year decline since December 2008, when semiconductor production plunged 18.1%. Compared with the same period last year, semiconductor production in February decreased by 41.8%.
Sources from the Korea Statistics Office said that the global demand for memory chips has weakened since the second half of last year, and the production of system semiconductors has also declined recently.
South Korea’s chip industry is an important pillar of the country’s economy, accounting for 12% of total exports in February. However, the South Korean economy is facing greater difficulties due to the decline in global demand for chips, which already experienced negative growth last quarter.
To address this challenge, the South Korean government hopes the economy will recover in the second half of the year and continue to support semiconductor investment as a key driver of economic growth. Last Thursday, South Korea’s parliament passed a plan to promote the semiconductor industry, providing tax incentives for companies to stimulate investment.
However, South Korea’s chip industry also faces geopolitical risks and the threat of a potential economic downturn. As central banks tighten monetary policy to combat inflation, the recession could further hit demand. In addition, U.S. technology companies continue to lay off employees also reflects the reduction in investment enthusiasm.
On the other hand, Korea’s total industrial output fell by 8.1% year-on-year in February, beating market expectations. The cyclical leading index also declined 0.3% from the previous month.
