South Korea’s manufacturing sector accounted for 27.2% of real gross domestic product in 2025, the highest level in a decade, according to a report released on July 22, underscoring the country’s growing dependence on semiconductors as the primary driver of economic growth.
The report by the National Assembly Budget Office said real manufacturing value added increased 2.3% from a year earlier to 632.4 trillion won (about $460 billion) in 2025, marking the largest manufacturing share of GDP recorded in the agency’s data covering the past decade.
Manufacturing has remained the backbone of South Korea’s economy, with value added expanding steadily except during the pandemic-induced downturn in 2020. Between 2016 and 2025, real manufacturing value added grew at an average annual rate of 2.7%, slightly exceeding the economy’s overall real GDP growth rate of 2.3%.
The expansion has been driven overwhelmingly by semiconductors.
Computers, electronic products and optical equipment accounted for 37.4% of total manufacturing value added in 2025, up from 22.7% in 2016—an increase of 14.7 percentage points. The Budget Office said the figures reflect an increasingly concentrated industrial structure in which semiconductors generate a growing share of manufacturing value.
Other manufacturing industries, including transportation equipment, machinery and chemical products, either lost share or remained broadly unchanged over the same period, highlighting the widening gap between the semiconductor industry and more traditional manufacturing sectors.
Economists expect the trend to continue this year as higher memory-chip prices support production and exports.
“Rising semiconductor prices are boosting value added, and South Korea has become heavily dependent on the chip industry,” said Yang Jun-seok, an economics professor at The Catholic University of Korea. “If chip prices continue to increase this year, manufacturing’s share of GDP will likely exceed last year’s level.”
South Korea’s manufacturing dependence is also unusually high by international standards.
Manufacturing represented 27.4% of the country’s GDP in 2024, according to data from the Organization for Economic Cooperation and Development, ranking second among OECD member countries behind Ireland, where the presence of multinational manufacturers has lifted industrial output.
The figure compares with 19.9% in Germany, 19.0% in Japan and the OECD average of 15.2%, reinforcing South Korea’s position as one of the world’s most manufacturing-intensive advanced economies.
While the semiconductor industry continues to strengthen South Korea’s global competitiveness, economists say the increasing concentration of growth in a single sector underscores the need to develop additional growth engines to reduce the economy’s exposure to fluctuations in the global chip market.
