South Korean semiconductor production fell 17.1% in February from a month earlier, the biggest month-on-month decline since December 2008, when semiconductor production plummeted 18.1%, according to data released by the South Korean Bureau of Statistics on Friday.
Semiconductor production fell by 41.8% in February compared with the same period last year. A source from the Korean Statistical Office said that since the second half of last year, the global demand for memory chips has weakened, and the production of system semiconductors has also declined recently.
Chip inventories rose 33.5% in February, while factory shipments fell 41.6%.
Chipmakers are an important part of South Korea's trade-dependent economy, accounting for about 12 per cent of total exports in February. The deterioration of global chip demand has exacerbated the challenges facing the South Korean economy.
Subsequently, according to South Korean media reports, Samsung Electronics, the world's leading memory chip company, is considering reducing production to cope with the depressed market conditions. It is expected that Samsung's production cuts will help accelerate the bottom of the memory market.
Interestingly, Lee Jae-yong, the former chairman of Samsung, recently held a meeting with executives of the company's chip department. Some executives raised the need to cut production, while Mr Lee decided not to cut production.
In the first quarter of 2023, the production lines of Meixia and Meiguang continued to be under low load. Western Digital, SK Hynix, Samsung and others will follow suit to reduce production, which will have the opportunity to alleviate the current oversupply situation, and the average price decline of NAND Flash will also converge to 10% and 15%.
Due to weak demand, even if manufacturers cut production to combat losses, NAND Flash industry revenue is still expected to decline 8.1 per cent in the first quarter compared with the previous quarter.
The continuous decline in SSD prices, even if Samsung and other large companies have reduced production control prices to inventory, but there will not be much problem, after all, demand is too weak, while there are domestic storage manufacturers at the top.