Global chip sales fall for first time since 2020, hitting South Korea's economy

Global chip sales contracted for the first time since early 2020, according to Bloomberg, battering South Korea's economy, which is highly adaptable to the industry and has struggled to adapt to weak demand.

Worldwide semiconductor sales fell 3% in September from a year earlier, according to data from the Washington-based Semiconductor Industry Association. In the same month, South Korean chipmakers' output fell 3.5% from a year earlier, the National Bureau of Statistics said separately on Monday, down from a 0.1% drop in August.

Semiconductors, the largest source of income for South Korea's economy, slowed last quarter as a weaker currency widened the trade deficit and rising global interest rates weighed on consumer demand for the country's technology exports.

Chip demand tends to cycle between boom and bust, and the latest slump has added to concerns among South Korean policymakers as they try to cushion the economy from a credit collapse triggered by defaults by local developers. A fatal crowd squeeze expected to kill more than 150 over the weekend will also weigh on consumer sentiment.

The Russian-Ukrainian conflict and U.S.-China trade tensions have overshadowed the earnings of South Korean chipmakers such as Samsung Electronics, which posted a lower-than-expected third-quarter net profit. The company said in its earnings call that it doesn't expect a recovery in demand until at least the second half of 2023.

Other chip data from Statistics Korea showed that inventory growth remained high, reaching 54.7% in September. Semiconductor factory shipments showed signs of stabilizing, down only 0.9% year-on-year.