South Korea’s output slows to 0.3% in March as chip gains reverse

Factory growth moderates whilst electronics swings reshape monthly industrial rhythm.

South Korea’s industrial production rose 0.3% month on month (MoM) on a seasonally adjusted basis in March, down from 2.1% in February, as a decline in semiconductor output followed a sharp prior-month increase, according to official data cited by Nomura Global Economics.

Industrial production increased 3.5% year on year (YoY) in March. Semiconductor output fell 8.1% MoM after a strong February, whilst electronics parts also declined.

Nomura attributed the drop largely to a payback effect following the earlier surge rather than a clear deterioration in the chip cycle. Semiconductor output remained up 9.9% YoY.

Motor vehicle production rose 7.8% MoM, whilst other transport equipment increased 12.3%, offsetting part of the weakness in chips. Machinery output increased over the month. Chemicals output fell 0.3% MoM.

Services production rose 1.4% MoM, led by financial and insurance services, which increased 4.6%, and transport and storage, which rose 3.9%.

Total industry production, which combines manufacturing and services, rose 0.3% MoM in March.

Facility investment rose 1.5% MoM, down from 14.6% in February. Machinery investment fell 0.3%, whilst transport equipment investment rose 5.2%.

Construction investment fell 7.3%, driven by declines in civil engineering and building activity.

Retail sales rose 1.8% MoM. Durable goods increased 9.8%, supported by smartphones and computers, which rose 30.1%.

Non-durable goods fell 1.3%, whilst semi-durable goods rose 0.3%.

The trend-adjusted coincident economic indicator rose to 100.1 in March from 99.6 in February. The leading indicator rose to 103.5 from 102.8.

Nomura said industrial activity did not yet reflect higher oil prices linked to Middle East tensions.

It said consumption trends remain fragile and expects consumption growth to slow in coming months as sentiment weakens and energy costs rise. It maintained its 2026 GDP growth forecast at 2.4%.