South Korea's chip production in February fell by 41.8% year-on-year, the largest drop since the financial crisis.

(Bloomberg file photo)

[Financial Channel/Comprehensive Report] In February, South Korean chipmakers experienced the largest reduction in production since the 2008 financial crisis, with output plummeting by more than 40%, indicating that the decline in semiconductor demand may be deeper and longer than people feared.

According to comprehensive foreign media reports, according to data from the Statistics Office of South Korea, chip production in February fell by 17.1% month-on-month, the largest monthly drop since December 2008; compared with the same period last year, chip production dropped by 41.8%, compared with 33.9% in January The decline got worse.

Inventories rose 33.5%, while factory shipments fell 41.6%, adding to signs of persistent weakness.

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Global demand for memory chips has weakened since the second half of last year, while output of system semiconductors has also declined recently, officials said.

Officials pointed out that the improvement in consumption in February is a positive signal, but the semiconductor industry has not yet shown signs of improvement. As South Korea relies heavily on the chip industry, it remains to be seen how the economy will develop.

Semiconductor makers are a lifeblood of South Korea's economy, accounting for about 12 percent of total exports in February.

The fading global demand for chips adds to the challenge for South Korea's economy, which already shrank last quarter.

Threats to South Korea's chip industry include heightened U.S.-China trade tensions and a potential recession, which could further damage demand as central banks continue to tighten policy to tackle inflation, while layoffs by U.S. technology companies also underscore weakening investment enthusiasm.

Policymakers hope for a rebound in the second half of the year and continue to focus on semiconductor investment as the economy's main growth engine.

The South Korean Assembly also passed the "K-Chips Act" on Thursday (30th) to stimulate investment through tax cuts and boost the domestic semiconductor industry.

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