The real value added of Korea's manufacturing rose 27% over the past 10 years, and semiconductors accounted for 25 percentage points of that. Other sectors contributed only 2 percentage points. This shows a concentration in which more than 90% of the total increase in manufacturing's real value added depends on semiconductors. The National Assembly Budget Office recently published a report titled "Korea's economy in 2026" with these findings.
◇ Manufacturing growth concentrated in electronics… semiconductor output quadruples in 10 years
Real value added refers to the new economic value created by a specific industry. It is calculated by subtracting the cost of materials and supplies and parts from the price of goods and services and removing inflation. It can be seen as an indicator directly tied to the economy's overall production capacity, job growth, and income expansion.
Last year, Korea's manufacturing real value added totaled 632.4 trillion won. That is up 27% from 2016's 498.4 trillion won. Over the same period, the sector that contributed the most to increases in manufacturing real value added was the manufacture of computers, electronics, and optical products, which includes semiconductors. Real value added in this sector doubled over the past 10 years, from 113 trillion won to 236 trillion won. As a result, it accounted for 92% of the total increase in manufacturing real value added.
By contrast, over the same period, real value added in the rest of manufacturing rose only 2.8%, from 385 trillion won to 396 trillion won. This includes the manufacture of chemicals and chemical products, transport equipment, and machinery and equipment.
This "semiconductor dependence" and "semiconductor tilt" can also be seen in the industrial production index. The index sets 2020 at 100 and evaluates annual changes in goods and services production activity. Comparing 2016 and last year, semiconductors surged more than fourfold, from 43.3 to 180.6. By contrast, steel and chemicals fell 15% (108.6→92.3) and 5% (93.8→89.5), respectively. Automobiles rose only 6.2% (118.5→125.9).
◇ Semiconductor dominance even dents jobs… "Manufacturing growth pillars must be diversified"
On this, the National Assembly Budget Office said in the report that "the concentration of manufacturing value added in the electronics industry centered on semiconductors is deepening." It also noted that "other traditional major manufacturing institutional sectors show relative contraction."
The problem is that within manufacturing, the semiconductor sector has a very low job creation effect compared with other sectors. The semiconductor industry's employment inducement coefficient—the number of direct and indirect jobs created when producing and selling 1 billion won worth of goods—is 2.4, far below the manufacturing average of 5.1 and the all-industry average of 8.2.
Youth unemployment has recently reached a serious level. In the second quarter of this year, unemployed people with a college degree or higher numbered 481,000, the highest in five years. The government also cut its forecast for the increase in the number of employed this year to 150,000 from 160,000 in January. While the semiconductor boom is lifting the economic growth rate, jobs are not increasing, leading to "jobless growth."
An official at the Ministry of Economy and Finance said, "The rise in the growth rate is coming mainly from semiconductors, but semiconductors do not have a high employment inducement coefficient, so there are limits to job creation," adding, "As growth is concentrated in the IT institutional sector, the polarized structure is widening."
Bae Gwan-pyo, a professor at Chungnam National University's Graduate School of Public Policy, said, "Korea's strength lies not only in semiconductors but in a comprehensive manufacturing structure that includes automobiles, shipbuilding, steel, petrochemicals, secondary batteries, and bio," adding, "Rather than a single-pole system dependent on one industry—semiconductors—we should move to a multipolar system where multiple flagship industries offset each other's downturns."