S. Korea: Industrial output falls in Oct on base effect of chip production

Seoul, Nov 28 South Korea's industrial output fell at the sharpest pace in over five years last month, government data showed on Friday, largely due to a base effect in semiconductor production despite the industry's ongoing upcycle.

Industrial production went down 2.5 percent from a month earlier in October, according to the data from the Ministry of Data and Statistics. It marks the steepest monthly fall since a 2.9 percent decline in February 2020, reports Yonhap news agency.

The output of the mining and manufacturing sector, considered the backbone of the economy, lost 4 percent on-month.

Notably, semiconductor production plunged 26.5 percent, marking the sharpest on-month drop since October 1982, when it fell 33.3 percent.

The ministry said the decline was driven largely by a strong base effect, as chip production had surged around 20 percent on-month in September, even though global semiconductor demand continues to rise on the back of the artificial intelligence (AI) boom.

"Amid booming semiconductor production, the base effect appears to have played an exceptionally large role," said Lee Doo-won, a ministry official.

Retail sales, a gauge of private spending, increased 3.5 percent on-month, rebounding after two consecutive months of decline.

This marks the highest increase since February 2023, though it is largely due to a base effect, the ministry said.

The growth was largely driven by higher sales of food and apparel, reflecting the impact of the extended Chuseok holiday that fell in early October.

Sales of semidurable goods, such as apparel, increased 5.1 percent, while nondurable goods, including cosmetics, jumped 7 percent. In contrast, sales of durable goods, such as home appliances, fell 4.9 percent.

Facility investment dropped 14.1 percent on-month in October, reversing the rebound recorded in the previous month, the ministry said.

Investment in machinery declined 12.2 percent, while investment in transportation equipment fell 18.4 percent.

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