South Korea's chip production and shipments both rebounded, and the recovery momentum of the technology industry became increasingly obvious

South Korea occupies an important part in the global semiconductor supply, so it has always been regarded as the "canary in the coal mine" of the global technology industry. Its chip production and shipments are one of the high-profile indicators. The data released by Statistics Korea on Thursday further strengthened the market's confidence in the recovery of the semiconductor industry, which is an extremely favorable signal for the industry and the global technology industry.

Data show that South Korea's chip production increased by 42% year-on-year in November, the largest increase since the beginning of 2017; shipments surged by 80%, reaching the fastest growth rate since the end of 2002. At the same time, inventories rose 36%, the smallest increase since February, highlighting strong demand.

These figures show that South Korea's semiconductor industry is gradually recovering from more than a year-long downturn, which also makes more chip manufacturers confident in future market development.

Economy rebounds further

As South Korea relies heavily on the semiconductor industry, the market slump in the past period has dragged down the overall growth of the South Korean economy. According to the Bank of Korea's forecast, South Korea's economy will grow by only 1.4% this year, lagging behind the 2.6% in 2022 due to rising interest rates, the slowdown in Asia's overall economic development momentum and emerging geopolitical risks.

However, a recovery in the chip industry is expected to fuel South Korea's economy next year. The Bank of Korea expects that semiconductor exports will strengthen further after resuming growth in October this year, the price of memory chips will rebound, and information technologies such as artificial intelligence will increase the demand for chips, helping South Korea's GDP to achieve 2.2% growth next year.

South Korea's Ministry of Finance also said in a statement after Thursday's data was released that external demand for high-performance semiconductors has helped the chip and machinery industries.

Shannon Nicoll, assistant economist at Moody's Analytics, pointed out that it is expected that the growth in global demand for Korean goods will alleviate the adverse effects of high local inflation and high interest rates, and industrial production will further rebound.