South Korea’s chip inventory climbs at fastest pace in 27 years

South Korea’s semiconductor inventory rose at the fastest pace in almost 27 years in January, underscoring a prolonged tech slump that’s dragging on the country’s economic growth.

Chip stockpiles jumped 28% from a month earlier, the biggest increase since February 1996, Korea’s statistics office said Thursday in a statement. From a year earlier, stockpiles advanced 39.5%.

Chipmakers are a key driver of South Korea’s trade-reliant economy, accounting for about 12% of total exports last month. With global semiconductor demand in a slump, the economy contracted in the final three months of 2022, and the current quarter also looks challenging as exports fall further.

Prospects for a recovery in chip demand are clouded by global central banks appearing set on keeping interest rates higher for longer and geopolitical tensions remaining elevated. Korea is under pressure from the US to reduce its reliance on China for chip sales and production in a development that could further weigh on the nation’s tech sector.

Separately, factory shipments plunged 25.8% in January while chip production fell 5.7%, compared with a month earlier, due to sharp falls in selling prices, according to the statistics office.