South Korea's semiconductor production has experienced its first year-over-year decline in over a year, indicating that the global artificial intelligence (AI) driven boom might be cooling down. According to the data released by the Korean Statistics Bureau, semiconductor production fell by 3% in September, following an 11% increase in the previous month. The growth in shipments also significantly slowed, decreasing from 17% in August to just 0.7%.
Despite this downturn in production, semiconductor inventories are depleting rapidly, with a 41.5% decline compared to the previous year. This trend suggests that the demand for memory chips may have peaked, leading to a gradual cooling in the industry.
Additionally, Samsung Electronics (SSNLF, Financial) reported that its semiconductor division's operating profit for the third quarter was only 3.86 trillion Korean won, falling short of the market's general expectations of 6.7 trillion won.
Semiconductors are a major driver of South Korea's exports and economic growth. The Bank of Korea is closely monitoring the economic and export conditions. Earlier this month, the central bank lowered its benchmark interest rate, signaling a shift in policy. Some economists anticipate that if South Korea's economic growth slows more than expected next year, the easing cycle may accelerate.
