South Korea's chip production in November fell 15% year-on-year, the biggest drop since 2009.

(Bloomberg file photo)

[Financial Channel/Comprehensive Report] According to data released by the South Korean Statistics Office on Thursday (29th), due to weak global demand, South Korea’s chip production in November fell by 15% year-on-year, shrinking for the fourth consecutive month, the largest decline since 2009, Overall industrial production shrank by 3.7% year-on-year (2021), the largest drop since the pandemic began.

According to comprehensive foreign media reports, the decline in economic activity shows that the recovery trend of this country closely related to the global economy is weakening. South Korea's economic growth has been pressured by falling exports and rising domestic interest rates.

Under the influence of China's epidemic lockdown and the global economic slowdown, the demand for IT has declined. In November, chip production fell by 11% month-on-month and 15% year-on-year. Semiconductor exports also fell by 29.8% year-on-year.

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Chip inventories grew 20% year-on-year in November, up from 12.9% growth in the previous (October) month.

Inventories have grown by double digits since October 2021, underscoring a global oversupply of memory chips as chipmakers are recalibrating their investment plans in response to falling demand for their products at home and abroad.

With central banks including the U.S. Federal Reserve (Fed) tightening monetary policy to fight inflation and Russia's war on Ukraine continuing to rage, the likelihood of major economies, including the U.S., slipping into recession is rising.

Although China's attitude towards epidemic prevention has changed, indicating that the country's economy will recover in the future, the surge in confirmed cases will complicate the near-term situation.

Asia's fourth-largest economy will continue to face uncertainty due to a slowing global economy, a slump in the chip industry and a potential interest rate hike, South Korea's finance ministry said.

On the production side, easing supply chain disruptions and shifts in China's anti-epidemic policies could have a positive impact.

But the knock-on effects of slowing exports, rising wafer inventories and truckers' strikes remain hurdles.

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