South Korea's semiconductor production declined for the first time in three months, as chipmakers relied on existing inventory rather than new production to meet export demand following two consecutive months of sharp output increases.
According to the January 2026 Industrial Activity Trends report released by the National Data Agency on the 4th, semiconductor production fell 4.4% month-on-month in January. This marks a reversal from gains of 6.9% in November and 2.3% in December last year.
The decline reflects a base effect from the two preceding months of consecutive growth. The Data Agency noted that semiconductor companies increased exports using existing inventory, while the launch of Samsung's new Galaxy smartphone was postponed from early in the year to March.
"Semiconductor production appears to have peaked last September, with volume growth limited since then," said Lee Du-won, Director of Economic Trends Statistics at the Data Agency. "However, as semiconductor prices surged due to increased demand, export value rose despite the production decline."
The adjustment in semiconductor output pushed the all-industry production index down 1.3% to 114.7 (2020=100) in January, also reversing after three months of gains.
The government expects semiconductor production to rebound. "Once Samsung Electronics and SK hynix expand their semiconductor production facilities, output volumes will increase significantly," Lee said. "Solid production of high-specification semiconductors such as High Bandwidth Memory continues."
Domestic demand indicators showed relatively strong performance in January. The retail sales index rose 2.3% for a second consecutive month, with gains across semi-durable goods including clothing (6.0%), durable goods such as telecommunications equipment and computers (2.3%), and non-durable goods including cosmetics (0.9%).
Facilities investment jumped 6.8%, turning positive for the first time in four months since September last year. Investment in semiconductor manufacturing equipment surged 41.1%, while transportation equipment including automobiles rose 15.1%.
Construction output plunged 11.3%, the steepest decline in 14 years since January 2012. "While the construction sector itself remains sluggish, it is positive that orders have increased for three consecutive months," Lee said.
The escalating conflict between the United States and Iran poses a risk to the industrial outlook. "Rising oil prices could affect domestic demand through inflation, and if the situation becomes prolonged and intensifies, it could impact exports by affecting overall global economic growth," said Cho Sung-jung, Director of Economic Analysis at the Ministry of Finance and Economy. "We are closely monitoring the ripple effects with relevant agencies."