South Korea’s chip output in November falls most since global financial crisis
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South Korea's chip production shrank for a fourth straight month, falling 15 per cent from a year earlier.
PHOTO: REUTERS
SEOUL - South Korea’s semiconductor production in November fell the most since the global financial crisis, weighing on the nation’s industrial output and pointing to a further cooling of overseas demand for tech components as the world economy slows.
Chip production shrank for a fourth straight month, falling 15 per cent from a year earlier for the largest drop since 2009, according to data released on Thursday from the national statistics office. Overall industrial production contracted 3.7 per cent from a year earlier for the biggest fall since the start of the pandemic.
The drop in activity speaks to weakening recovery momentum in a nation closely tied to the world economy. South Korea’s growth is already under pressure from falling exports and rising interest rates at home, with the gloomy outlook overseas adding to concerns.
The probability of a global recession is rising as the United States leads a wave of monetary tightening to combat inflation and Russia’s war on Ukraine continues. While China’s about-turn on its zero-Covid policy
The weakening chip demand adds to an array of factors making South Korea’s economic outlook more uncertain, including the implications of a recently ended truckers’ strike and a crowd-crush tragedy in Seoul, the Finance Ministry said in a separate statement.
The cloudier outlook gives the Bank of Korea more reasons to be cautious as it mulls over the end of its tightening cycle. It has been hiking rates for more than a year and is debating whether to carry out one or two more in 2023.
The latest output figures showed chip production was also down 11 per cent on a month-over-month basis, while semiconductor inventories climbed 20 per cent from a year earlier in November, picking up from 12.9 per cent in the previous month, according to Statistics Korea.
The double-digit increase in inventories since October last year underscores a global oversupply of memory chips in which South Korea leads production. Chipmakers are recalibrating their investment plans as they brace themselves for a drop in demand for their products both at home and abroad. BLOOMBERG
