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Semiconductors (Photo: Bloomberg)
By Sam Kim
South Korea’s semiconductor production rose the most in 14 years in February, an indication of the ongoing recovery in the country’s most important industrial sector and global technology demand.
Production rose 65.3 percent from a year earlier, the biggest increase since late 2009, according to data released Friday by the national statistics agency. Semiconductor shipments also rose 59 percent, although they were down from 62.7 percent in January. Inventory shrank 16.2 percent, falling for a second month in another sign of strong demand.
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The favorable figures, released in a report showing a stronger-than-expected expansion of overall industrial production, suggest that momentum in domestic economic growth will continue as semiconductors account for the bulk of South Korea’s exports. Production could have been higher if the Lunar New Year holiday had taken place in January, like last year, instead of February.
Semiconductor production growth likely continued in March, as suggested by chip exports rising 46.5 percent year-over-year in the first 20 days of the month. Rising demand for AI-related memory is among the biggest drivers of growth, with the country’s second-largest chipmaker, SK Hynix Inc., forecasting continued positive momentum in its supplies to Nvidia Corp. in particular.
What Bloomberg Economics says…
“We expect production to grow steadily in March, driven by strong external demand for AI memory chips. A fragile recovery in China may hit orders for South Korean products, offsetting some of the traction in global chip demand.”
— Hyosung Kwon, economist
The memory chip market that underpins South Korea’s semiconductor industry is known for its boom and bust cycle. Its rebound gives the Bank of Korea more confidence to keep its tight policy stable and continue the fight against inflation for now.
Overall industrial production grew 4.8 percent, more than the 4 percent estimated by economists. Referring to the increase in production, the Ministry of Finance said that the recovery of economic momentum is becoming more evident. The ministry promised to carry out fiscal spending quickly in the first half.
First published: March 29, 2024 | 7:36 a.m. IS
