Record surge in South Korea chip stockpiles as demand sputters

SEOUL - South Korea’s semiconductor inventory surged by the most in seven years, underscoring ongoing weak demand for chips despite the global boom in artificial intelligence development.

Stockpiles rose 83 per cent in April from a year ago – the biggest increase since April 2016 – and the index tracking inventories jumped to a record, according to data from Statistics Korea on Wednesday.

Meanwhile, factory shipments fell 33 per cent from the year-ago period and production was cut by 20 per cent, the data shows.

Smartphone and PC manufacturers are working through a glut of inventory amid a slowdown in global demand for tech products.

Apple shipments of MacBook laptops plummeted 40 per cent in the first quarter, leading a sharp decline across the personal computer market.

Executives from Lenovo Group, Sony Group and Qualcomm – the world’s largest supplier of smartphone processors – have all recently said they expect inventories to remain high through the second quarter and markets to normalise later in 2023.

Smartphones, however, may take longer to rebound, they said.

Activity in South Korea’s chip industry is an important gauge of global demand for electronics, as the country houses two of the world’s largest semiconductor companies, Samsung Electronics and SK Hynix.

The vast majority of South Korean semiconductor exports are memory chips, which go into everything from smartphones, laptops and digital cameras to connected cars and large data centres.

China is the biggest market for those chips.

The technology is also a major part of South Korea’s economy, accounting for about 13 per cent of total exports in April. BLOOMBERG