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South Korea’s Chip Stockpile Jumps Amid Tech Slowdown Concerns

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(Bloomberg) -- South Korea’s chip stockpiles increased by the most in more than four years, suggesting a slowdown in demand for memory chips used in electronics worldwide.

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The nationwide inventory jumped 53.4% in May from a year earlier, the statistics office said Thursday. An earlier 54.1% gain in March 2018 coincided with a slowdown in revenue growth in the memory chip industry. Semiconductor stockpiles have been rising on a year-on-year basis since October last year.

South Korea is the world’s biggest producer of memory chips that go into everything from smartphones and laptops to cars. The mounting stockpiles come amid growing concerns over a possible global economic recession driven by inflationary pressure, rising interest rates, deteriorating consumer confidence and Russia’s ongoing war on Ukraine.

The report also showed that shipments of semiconductors slowed, increasing just 8.9% in May from a year earlier, according to Statistics Korea, for the first single-digit rise since October 2019. Production gains also decelerated to 24.3% for the slowest growth since February 2021.

Semiconductors are the biggest single driver of South Korea’s economy. Shares of its chipmakers from Samsung Electronics Co. to SK Hynix Inc. have been on the decline in the past year amid questions about future demand and global central bank policy tightening that has put pressure on investment in technology stocks.

Still, overall industrial production showed a recovery from April’s fall as the impact of lockdowns in China eased. Factory output rose 7.3% in May from a year earlier, beating a 4% forecast by economists.

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