South Korean chip production falls for first time since 2018


Posts: 8,495   +105
Staff member
In brief: South Korea's semiconductor industry has been dealing with excess stock these last six months. It's caused YoY production levels to fall for the first time in four years as demand shrinks and inventories remain high. Once again, the finger of blame is being pointed at the global economic downturn, especially the slumping electronic goods market.

As reported by Bloomberg, the South Korean semiconductor industry saw year-on-year output fall by -1.7% in August, marking the first YoY decline since January 2018. It comes as inventories reach 67.3% and factory shipments decline (-20.4%) for a second consecutive month.

This isn't the first sign of a sector under pressure. The largest US maker of memory chips, Micron, yesterday forecast quarterly sales that were almost $2 billion below Wall Street estimates, while Japanese NAND giant Kioxia said it is reducing output and will lower production by 30% over the coming months.

Samsung also warned that the second half of 2022 was going to be a tough one. According to IC Insights, the DRAM market halved in size between May and July, and the pattern isn't about to change.

A recent report from TrendForce predicts that NAND flash prices will drop by 15 - 20% in the fourth quarter of the year. 3D NAND fell 30 – 35% in Q3, and analysts predict another 20 – 25% decline in Q4. But it's good news for consumers looking to buy products such as solid-state drives, which are going to experience further price drops.

While the current global economic situation is a big part of the problem, much of what we're seeing now is the post-lockdown effect. The beginning and height of the pandemic saw demand for electronic items skyrocket as most of the world worked, learned, and played at home. Companies couldn't keep up with consumers, which contributed to low availability and high prices at the time. But the end of the lockdowns and cooling demand left many chip companies with excess stock.

In related news, gaming monitor shipments just fell for the first time ever, and Apple has cut back iPhone 14 production.

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Posts: 858   +1,451
So, better availability of new cpu/gpu, ps5/xsx and car electronics becomes fact. As well as potentially a bit better prices, although inflation will eat this up.
Still, a good news regardless. People are not confined in their homes like during top level of pandemics so things getting bit better.


Posts: 521   +820
"South Korea's semiconductor industry has been dealing with excess stock these last six months"

I just imagine all the full warehouses of chips stocked in this time and all the stakeholders just yelling:
"wtf are we going to do now with all this overpriced stuff, that we cannot sell at inflated prices".

Karma is a real b...

Uncle Al

Posts: 9,363   +8,581
Sounds like they need to expand their line to include chips for the various automobiles .... that market is still very dry and despite to get more .....


Posts: 2,257   +4,397
Memory chip makers are notorious for price fixing so to me this is a transparent attempt at yet another round of price fixing this time to try and slow down the depreciation of chips.

This is highly illegal of course and even the most staunch capitalist should recognize that it's basically the market flat out not working at the very least by being able to communicate and constrain supply to drive prices back up/slow down dedpreciation.