The Korea Herald


Chips production sinks 17% in February despite overall industrial output gains

By Yonhap

Published : March 31, 2023 - 10:34

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Stacks of containers at a port in Korea's southeastern city of Busan on last Tuesday. (Yonhap) Stacks of containers at a port in Korea's southeastern city of Busan on last Tuesday. (Yonhap)

South Korea's semiconductor output sank 17.1 percent on-month in February, the sharpest decline in more than 14 years, though the country reported gains in the overall industrial production, private spending and facility investment for the first time in over a year, data showed Friday.

Industrial output grew 0.3 percent from a month earlier in February following a 0.1 percent rise each during the previous two months, according to the data from Statistics Korea.

But the combined output in the mining, manufacturing, gas and electricity industries fell 3.2 percent in February due mainly to the sharp decrease in the chips output, the backbone of the South Korean economy.

The 17.1 percent production fall of semiconductors was the largest on-month decline since December 2008, when the production of semiconductors dived 18.1 percent, the data showed. Compared with a year earlier, the chips output nosedived 41.8 percent.

Global demand for memory chips has weakened since the second half of last year, and the production of system semiconductors also has gone down recently, agency officials said.

But the service output rose 0.7 percent on-month in February, led by accommodation and food industries, as people's growing outdoor activities rose amid favorable weather conditions and eased COVID-19 restrictions, according to the agency.

Retail sales, a gauge of private spending, rose 5.3 percent, ending three consecutive months of declines.

Demand for foodstuffs, cars and clothing all grew last month on the back of a low-base effect, major promotional events and subsidies for buyers of electric vehicles, among other factors, according to the agency.

Facility investment also added 0.2 percent on-month.

It is the first time since December 2021 that the industrial output, private spending and facility investment all marked on-month growth, the agency said.

"The improvement in consumption is positive, but the semiconductor industry has not yet shown a sign of turnaround. As the national economy heavily depends on the chips industry, it remains to be seen how the economic situation unfolds," agency official Kim Bo-kyung said. (Yonhap)