SEOUL – South Korea’s semiconductor production fell from a year earlier for the first time in more than a year, in another sign that a boom cycle fuelled by artificial intelligence (AI) development worldwide may be starting to cool.
Nationwide semiconductor production slid 3 per cent in September, a sharp reversal after it gained 11 per cent a month earlier, according to official data released on Oct 31. The growth in shipments also slowed to 0.7 per cent from 17 per cent in August.
Still, inventory levels showed stockpiles continue to be worked through at a rapid clip, as they declined 41.5 per cent from a year earlier in September. The numbers paint a picture of an industry that may be cooling gradually as demand for memory chips peaks.
Semiconductors are the biggest drivers of exports and economic growth for South Korea. They are important to Singapore, too, accounting for about 40 per cent of its manufacturing output.
Separately on Oct 31, Samsung Electronics reported earnings that showed its semiconductor division missed market expectations for operating profit, earning just 3.86 trillion won (S$3.7 billion) in the third quarter, a result that fell shy of a consensus estimate of 6.7 trillion won.
However, Samsung shares surged after the company said it is making progress in winning certification from Nvidia for its most advanced AI memory chips, according to an executive.
The once-dominant memory maker is fighting to get its latest chips certified by Nvidia to help AI accelerators work. This has provided an unusually long window for rivals SK Hynix and Micron Technology to carve out a commanding lead in the booming high-bandwidth memory arena.
But Samsung now expects to sell its highest-margin and most advanced HBM3E chips to customers in the fourth quarter, with the company making “meaningful” progress in the qualification process with a major customer, Mr Kim Jae-june, executive vice-president of Samsung’s memory business, said on an earnings call.
