South Korea's Semiconductor Stockpiles Surge to Fastest Rate in Nearly 27 Years, Poses Challenges for Electronic Component Distributors

In January, semiconductor inventory in South Korea increased at the fastest rate in nearly 27 years, highlighting the long-term sluggishness of the technology industry that has been dragging down the country's economic growth. The Korean Statistical Office stated that chip inventory jumped 28% from the previous month, the largest increase since February 1996, and increased 39.5% from the same period last year. As reported by Bloomberg, semiconductor manufacturers are the main driving force of Korea's trade-dependent economy, accounting for about 12% of the country's total exports last month. With global semiconductor demand declining, the economy shrank in the last quarter of 2022, and this quarter looks challenging as exports continue to fall. Additionally, the report indicated that South Korea is facing pressure from the US to reduce its reliance on China for chip sales and production, which could further weigh on the country's technology industry. According to statistics released by the Korean Ministry of Science, Technology, Information and Communication last month, ICT exports in January amounted to $13.1 billion, a 33.2% decrease from the same period last year. Due to the impact of the global economic downturn and the continued slump in the semiconductor industry, ICT exports have decreased for seven consecutive months since July of last year. This news is important for electronic components distributors to be aware of as it may affect their supply chain and sourcing strategies.