Semiconductor Manufacturing Sector’s Operating Ratio Index Hit 43-month Low

Statistics Korea announced on March 31 that South Korea’s semiconductor manufacturing sector posted an operating ratio index of 97.1 last month, down 4 percentage points from the previous month. That point is the lowest in 43 months.

The index had been as high as 114.1 in October 2018, but fell for four months in a row. Last month, the index dipped below 100 for the first time since August 2015.

At present, the local semiconductor industry is undergoing a drop in exports and a drop in export unit price at the same time. Specifically, exports showed a year-on-year decline of 8.4 percent, 23.3 percent and 24.8 percent in December 2018, January 2019 and February 2019, respectively. Likewise, semiconductor exports for the first three weeks of March fell 25 percent from a year earlier.

Last month, the semiconductor and automobile sectors led a decline in the operating ratio index of the manufacturing industry as a whole. The index reached a 28-month low of 95.6 in March with a month-on-month decline of 2.9 percent, the steepest decline in two years.

Experts point out that an economic recovery is becoming increasingly distant. Last month, the total capital expenditures fell 10.4 percent from the previous month as well.