S.Korean semiconductor industry faces sharp decline: report

The Korea Development Institute (KDI), a renowned government-affiliated economic think tank in South Korea, disclosed on Sunday that the domestic semiconductor market is experiencing a significant downturn reminiscent of the 2001 dot-com bubble collapse and the 2008 global financial crisis.

The institute reported that many semiconductor industry indicators in February have deteriorated to a level similar to these past economic events.

KDI's "April Economic Trends" publication highlighted that the domestic semiconductor market has been on a steep decline since the second half of last year, following a peak in March.

Semiconductor output in February dropped by 41.8% compared to the same month last year, showing a decline akin to July 2001 (-42.3%) and Dec. 2008 (-47.2%). Additionally, the capacity use index, based on seasonally adjusted data, also fell by 49.1% compared to the previous peak.

According to KDI, the downturn in the semiconductor industry, which accounts for nearly 20% of South Korea's exports, is a major contributor to the slowdown of the domestic manufacturing sector and the overall economy.

Semiconductor exports in the first quarter of this year plummeted by 40% compared to the same period last year. This accounts for -7.9 percentage points of the export value decrease rate (-12.6%) in the first quarter. Furthermore, the average capacity use of domestic manufacturing in February dropped sharply by 10 percentage points to 68.4% compared to the same period last year (78.4%).

Write to Sang-Yong Park at yourpencil@hankyung.com