The high dependency on semiconductors in the domestic economy is widening the gap between large and small businesses.
According to Statistics Korea’s National Statistical Portal (KOSIS) and Industrial Activity Trends on the 6th, in the first quarter of this year, the production index of large businesses in the manufacturing sector increased by 7.9% compared to the same period last year, reaching 111.1 (2020=100). This marks the largest quarterly growth rate since a 10.2% increase in the fourth quarter of 2021.
The growth rate of production by large businesses compared to the same period last year had been negative from the third quarter of 2022 to the second quarter of last year before turning positive in the third quarter of last year. Since the fourth quarter of last year (7.3%), it has shown consecutive growth rates in the 7% range for two months.
On the other hand, the production index of small and medium-sized enterprises (SMEs) for the first quarter of this year was calculated at 94.3 (2020=100), showing a 2.0% decrease from the first quarter of last year. The production index of SMEs had been on a downward trend for four consecutive quarters from the fourth quarter of 2022 (-3.5%), briefly reversing to a slight increase in the fourth quarter of last year (0.1%), but decreased again in the first quarter of this year.
The main reason for the different directions in production indices between large and small businesses is attributed to the semiconductor industry. In the first quarter of this year, the manufacturing production index increased by 6.1% compared to the same period last year, but when excluding semiconductors, it decreased by 1.2%. The manufacturing production index excluding semiconductors has been on a downward trend for six consecutive quarters since the fourth quarter of 2022 (-2.9%).
Export indicators also highlight the clear reliance on semiconductors. Last month’s exports recorded $56.26 billion, a 13.8% increase from the same month last year, with semiconductor exports accounting for approximately $10 billion (17.7%).