The electronics and telecommunications sector, hit hard by declining semiconductor demand, experienced a 15.9% drop in shipment value—the steepest decline recorded since data collection began in 2000. (Yonhap)
SEOUL, Dec. 16 (Korea Bizwire) – South Korea’s manufacturing and mining sectors saw their first decline in business establishments in seven years, driven by a slowdown in the semiconductor industry and a downturn in textiles.
According to Statistics Korea’s preliminary Mining and Manufacturing Survey, released on December 16, the total number of businesses with 10 or more employees fell by 208 to 73,384 in 2023, marking a 0.3% decrease from the previous year.
Key Industry Declines
The slump in electronics and telecommunications—exacerbated by falling semiconductor demand—led to a 15.9% drop in shipment value for the sector, the steepest decline since data collection began in 2000.
The value-added output for the sector also plummeted by 35.1%. Factors such as reduced semiconductor prices and lower demand for LCD panels played a significant role.
The textile industry, plagued by weak demand and production shifts overseas, saw the number of businesses shrink by 141, or 5.1%. Chemical manufacturing also reported a 12.2% drop in shipment value, attributed to declining crude oil prices and lower prices for basic chemical products, though value-added output rose by 2.3%.
This file photo shows a container yard in South Korea’s southeastern port city of Busan (Image courtesy of Yonhap)
Broader Economic Impact
The total shipment value of the mining and manufacturing sectors dropped by 2.5% to 1,992.1 trillion won ($1.5 trillion), while value-added output fell by 7.4% to 671.2 trillion won. Average shipments per business declined by 2.3% to 27.2 billion won.
Employment in the sector also contracted, with the workforce declining by 10,000 to 2.98 million, marking the first drop in three years. The electronics and telecommunications sectors recorded significant job losses, shedding 7,200 jobs (2.1%).
Automotive Industry Outperforms
Despite the overall contraction, the automotive industry showed resilience. Increased sales of high-end and eco-friendly vehicles boosted shipment value by 16.3% and value-added output by a similar margin.
Outlook
The data highlights the challenges facing South Korea’s manufacturing sector as global demand for semiconductors wanes and key industries grapple with structural shifts. However, segments such as eco-friendly automotive manufacturing offer a glimpse of potential recovery amidst broader economic pressures.
M. H. Lee (mhlee@koreabizwire.com)
