Illustration picture of semiconductor chips
SEOUL: Inventory of South Korean chipmakers has increased to a nearly 26-year high in January, data shows, reflecting the sluggish global demand amid the economic uncertainties.
The inventory-to-sales ratio of chips came to 265.7% in January, the highest since 288.7% posted in March 1997, according to the data compiled by Statistics Korea.
A higher ratio generally indicates that companies are facing more hurdles in selling their products, although the figure may rise when manufacturers stock up for large shipments.
A rise in the ratio may also induce chipmakers to reduce production or lower prices further to maintain sales.
Exports of semiconductors, the country’s key export item, dived 42.5% to US$5.96bil (RM26.6bil) in February from a year earlier amid the downcycle of the chip industry.
With Asia’s No. 4 economy depending highly on the chip industry, South Korea’s exports fell for the fifth consecutive month in February, sinking 7.5% year-on-year to US$50.1bil (RM224bil).
The country’s overall outbound shipments, meanwhile, edged up 0.8% over the period, when excluding chips, separate data from the trade ministry showed earlier.
Last week, Finance Minister Choo Kyung-ho called for the National Assembly to promptly pass a bill on providing more tax incentives to chipmakers amid the prolonged downturn in exports.
Under the proposed tax code revision, the government will apply a higher tax credit rate of 15% on facility investment in the chip industry for conglomerates, which is above the revision of 8% passed at parliament in December. — The Korea Herald/ANN
