South Korea’s semiconductor sector, a major pillar of the nation’s economy, began to show signs of strain in March 2023, as global demand for chips cooled significantly.

The country’s two leading semiconductor giants, Samsung Electronics and SK Hynix, reported significant declines in profits, with both companies facing challenges from reduced orders and falling prices for memory chips.

Samsung’s profit dropped by 10% year-on-year, while SK Hynix’s profits plummeted by 60%, marking its worst performance in years.

Experts attributed this slowdown to several factors: the global semiconductor oversupply, weaker demand from tech companies, and broader economic uncertainty, including inflationary pressures in the United States and Europe.

The South Korean government pledged to support the sector through subsidies and long-term investment in research and development, while also pushing to diversify the country’s supply chains for critical components.