South Korea's economy expands 1.0% in third quarter, driven by semiconductor sector

South Korea's economy expanded 1.0% year-on-year in the third quarter, according to preliminary data, with gains in the semiconductor sector providing the primary boost to growth. The manufacturing-dependent nation has relied increasingly on its chip industry as a driver of economic performance amid global demand for memory and advanced processors.

The semiconductor surge reflects strong international demand and improved conditions in the chip market after a period of oversupply pressured prices and corporate earnings. South Korea's dominance in memory chip production has made the sector critical to overall economic performance, with major manufacturers ramping up capacity to meet global needs.

The quarterly expansion, while positive, underscores the uneven nature of South Korea's recovery. Growth has remained constrained by headwinds in other sectors, including construction and services, as domestic consumption continues to face pressure from high household debt levels and elevated interest rates.

The result aligns with economist expectations for modest growth in coming quarters, contingent on sustained global demand for semiconductors and the trajectory of international trade conditions. Policymakers continue to monitor risks including potential cooling in global tech demand and geopolitical tensions affecting supply chains.