Semiconductor Boom Leading to Increased Industrial Investment, but Employment Still Lagging Behind | Be Korea-savvy

Semiconductor Boom Leading to Increased Industrial Investment, but Employment Still Lagging Behind


Details of a report from the Bank of Korea released October 19 have revealed that the recent boom in semiconductor manufacturing for domestic companies has led to increased plant and equipment investment, while employment figures remain nearly constant. (Image: Yonhap)

Details of a report from the Bank of Korea released October 19 have revealed that the recent boom in semiconductor manufacturing for domestic companies has led to increased plant and equipment investment, while employment figures remain nearly constant. (Image: Yonhap)

SEOUL, Oct. 20 (Korea Bizwire)Details of a report from the Bank of Korea released October 19 indicate that the recent boom in semiconductor manufacturing for domestic companies has led to increased plant and equipment investment, while employment figures remain nearly constant.

The report identified the periods between the fourth quarters of 2002 and 2006 and between the second quarter of 2012 and the fourth quarter of 2014 as prior semiconductor boom phases, and it compared them to the currently ongoing one (last year’s second quarter to the present).

The results of the data comparison showed that the South Korean economy’s reliance (measured by exports, company profits and productivity) on the semiconductor industry had grown over time. 

For instance, nearly one fourth (20.2 percent) of all plant and equipment investment during a one-year period starting in the second quarter of last year was made by the semiconductor industry, around double the figures recorded in the first (9.5 percent) and second (11.4 percent) boom phases.

For instance, nearly one fourth (20.2 percent) of all plant and equipment investment during a one-year period starting in the second quarter of last year was made by the semiconductor industry, around double the figures recorded in the first (9.5 percent) and second (11.4 percent) boom phases. (Image: Yonhap)

For instance, nearly one fourth (20.2 percent) of all plant and equipment investment during a one-year period starting in the second quarter of last year was made by the semiconductor industry, around double the figures recorded in the first (9.5 percent) and second (11.4 percent) boom phases. (Image: Yonhap)

Likewise, semiconductor exports, productivity and company profits all comprised larger portions of their totals than during the previous boom periods.

Amidst the positive all-around growth, what has not been able to keep up is industry employment – only 4,000 jobs were added compared to last year, comprising a paltry 1 percent of the national increase in employment (360,000).

Due to semiconductor manufacturing relying heavily on equipment and infrastructure, experts point out that the number of jobs produced for every dollar in investment is comparatively lower than that of other industries. 

The Bank of Korea report states semiconductors will continue to be a driving force for the economy for some time, though the torrid pace will gradually slow down.

“The period of expansion for plant and equipment investment of the semiconductor industry will persist throughout the next year, and even as the market for semiconductors cools, the likelihood of production taking a nose dive is low,” the report claims. 

On the back of a recovering global economy, plant and equipment investments in industries like industrial machinery will rise, and other business sectors’ fortunes will improve, acting as a buffer from any negative impact the semiconductor industry’s decline may have, the report concluded.

 

S.B.W. (sbw266@koreabizwire.com)

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