Reduced semiconductor production impacts the overall industry... consumption has increased for two consecutive months

In January of this year, due to adjustments in the semiconductor industry’s production, the entire industry’s output shifted back to a decline after three months. However, consumption continued to grow, and driven by expanded imports of semiconductor manufacturing equipment, equipment investment also showed a significant increase.

According to data released by the National Bureau of Statistics, the overall industrial production index for January was 114.7, down 1.3% from the previous month. This figure measures the activity level across all domestic industries, indicating the flow of industrial production. Notably, semiconductor production declined by 4.4%, contributing to this decrease. This was due to the base effect of a surge in semiconductor production at the end of last year. Despite strong export performance, production trends showed a downward movement.

Retail sales have increased for two consecutive months. While service industry output remained unchanged, the retail sales index rose for the second month in a row, driven by increased sales of clothing, communication devices, cosmetics, and other goods. In particular, in the communication device sector, KT’s waiver of penalties encouraged replacement demand, boosting sales. In terms of investment, the expansion of semiconductor manufacturing equipment investment was prominent, marking the first positive growth in equipment investment since September last year.

On the other hand, the value of completed construction projects dropped sharply, but the value of construction orders increased significantly, indicating a potential recovery in the construction sector. Construction orders for residential and railway civil engineering projects both increased, with a year-over-year growth of 35.8%.

The government generally expects industrial activity to improve and is closely monitoring the potential ripple effects of instability in the Middle East on the economy. Especially as the situation may become prolonged, rising oil prices could impact prices. The future market trend will likely depend on the development of the Middle East situation and its influence on the global economy.