On Monday, according to Korea's Statistical Office, South Korea’s semiconductor inventory experienced its fastest reduction since 2009 last month, highlighting the rising demand for high-performance memory chips used in AI development.
Data reveals that in August, South Korean chip inventory fell by 42.6% year-on-year, a sharper decline than July’s 34.3%. Concurrently, August saw a 10.3% increase in chip production and a 16.1% increase in shipments, suggesting a prolonged boom in the semiconductor industry through most of the third quarter.
The persistent chip demand indicates that the driving force behind South Korea's economic growth might continue to rise. Memory chips, crucial for South Korea’s trade-dependent economy, are primarily produced by the world's two largest memory chip manufacturers, Samsung Electronics and SK Hynix. Both companies are competing to supply Nvidia and develop advanced, profitable memory solutions known as High Bandwidth Memory (HBM).
Analysts regard the memory chip market as a “barometer” for the semiconductor industry. Stimulated by the demand for AI computing power, the HBM market is expected to grow rapidly. Last Thursday, South Korea’s SK Hynix announced it had begun mass production of the world’s first 12-layer HBM3E product, boasting a capacity of 36GB, the largest among existing HBM capacities.
On Tuesday, South Korea will release September’s export data, including semiconductor exports. Earlier this month, data showed that August chip exports surged by 37.6% year-on-year, reaching $11.9 billion, marking ten consecutive months of double-digit growth. Memory chip exports soared by 71.7% year-on-year.
Another report revealed that South Korea’s industrial output in August exceeded economists’ expectations, growing by 3.8% year-on-year compared to the forecasted 1.9%. This year, the significant rebound in chip exports driving economic growth is convincing South Korea’s monetary authorities to delay interest rate cuts. Last month, the Bank of Korea maintained the seven-day repo rate at 3.5%, in line with economists' expectations.
However, with the Federal Reserve initiating an easing cycle by cutting rates by 50 basis points this month, and neighboring Asian countries like China and Thailand rolling out various monetary and fiscal stimulus measures, it's anticipated that the Bank of Korea may begin its first rate cut in October.
