South Korea Chip Output Grows Rapidly

The semiconductor industry in South Korea is currently recording the best state of affairs in recent years, the material form of expression of which is associated with a rapid increase in production volumes.

South Korea Chip Output Grows Rapidly

The media reports that the mentioned sphere of activity in the current period demonstrates not only an impressive growth in the bulk of making chips but also a significant increase in supplies. Experts say that this situation signals what can be described as a revival of technological momentum. The current state of affairs gives rise to claims that South Korea has very good prospects in sphere production activities next year. The situation in this country is also important for the global technology sector in terms of its condition and intensity of functioning.

In November, chip production in South Korea showed an increase of 42% compared to the same period last year. This indicator is the highest since the beginning of 2017. Also in November, shipments of products from South Korean microcircuits manufacturers increased by 80% year-on-year. This growth rate is the largest since December last year. The relevant information was published by the National Statistical Office of South Korea on Thursday, December 28.

Inventories of chip manufacturers from the Asian country increased by 36% year-on-year in November. This is the lowest growth rate since February 2023.

Data released on Thursday indicate that South Korea’s most important manufacturing sector is now starting to move in the opposite direction from the downturn in which the industry has been in for more than a year. The negative situation in the sphere of making microcircuits has become a factor of significant pressure on the economic system of the Asian country.

The positive momentum in the chip manufacturing industry can also be described as a good signal for such producers of related products as Samsung Electronics Co. and SK Hynix Inc. These companies are the largest makers of microcircuits in South Korea.

The global chip market is currently experiencing a gradual recovery in consumer demand. Perhaps the current trend will intensify next year. If a positive scenario is implemented, this will be a favorable circumstance for South Korea, allowing it to increase financial revenues to the country’s budget and the private business sector of the state.

The Asian country’s economic system is heavily dependent on trade. During the current year, South Korea has experienced difficulties caused by weak demand for semiconductors. The central bank of this country predicts that the local economy will grow by 1.4% in 2023. Over the past year, the corresponding indicator showed an increase of 2.6%.

Currently, South Korea’s economic system is under the influence of such negative factors as high-interest rates, risks caused by the tense situation in the space of geopolitical relations, and slowing growth in China.

Current data on the financial indicators of the semiconductor industry demonstrate that Seoul can have reasonable hopes for local chip manufacturers in the context of striving for a positive dynamic economy.

Makers of microcircuits are nowadays a kind of driving force for South Korea’s economic development. In November, the volume of industrial production showed an increase. This indicator increased by 5.3% compared to the result for the same period last year.

The recovery in demand for high-performance semiconductors has helped improve the situation in sphere chip manufacturing and mechanical engineering. This is stated in a statement by the Finance Ministry of South Korea.

Economist Hyosung Kwon says that the growth of industrial production in the Asian country in November turned out to be more significant than expected, and indicates that the economic system of the state is gathering steam in the fourth quarter of the current year.

South Korea’s central bank expects the situation to improve next year. The financial regulator predicts that in 2024 the Asian country’s economy will grow by 2.2% against the background of further strengthening of exports, which returned to the positive dynamic zone in October this year.

Currently, a recovery in the prices of memory chips is being recorded. Advanced technologies, primarily artificial intelligence, contribute to increasing consumer demand for microcircuits.

Shannon Nicholl, associate economist at Moody’s Analytics, expects industrial production in South Korea to grow as global consumer interest in goods from this country intensifies. The expert also believes that local barriers, including inflationary pressure and high-interest rates, will weaken in the Asian state next year.

At the same time, certain risks for the South Korean economic system will be relevant next year. With the highest degree of probability, it can be assumed that in 2024 China will continue to make efforts to strengthen its economy. This circumstance may become a factor of negative impact on the prospects for global growth. Also next year, American consumers may face difficulties amid prolonged interest rate cuts. The sphere of global trade continues to be threatened by protectionism.

As we have reported earlier, Samsung and ASML to Invest in Chip Plant in South Korea.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.