South Korea's Factory Output Hits 31-Month Low Amid U.S. Tariff Impact on Tech and Gaming Industries

US • Business • 05/02 01:01
South Korea's Factory Output Hits 31-Month Low Amid U.S. Tariff Impact on Tech and Gaming Industries

South Korea's manufacturing sector contracted sharply in April, with the PMI dropping to 47.5, due to U.S. tariffs affecting global trade and demand for exports like semiconductors. Microsoft and Sony raised console prices due to increased production costs from tariffs. Apple reduced its share buyback by $10 billion, citing tariff-related expenses, and is shifting its supply chain from China to India and Vietnam. These developments highlight the broad impact of U.S. trade policies on global industries.

Key Updates

05/05 13:30

India Positioned as Beneficiary in U.S.-China Trade War: Analyst Gary Shilling Cites Demographics and Governance

Market analyst Gary Shilling identifies India as a potential beneficiary of the U.S.-China trade war, citing its demographic strength, democratic governance, and English proficiency. In a CNBC interview, Shilling highlighted India's growing population, surpassing China, as a key advantage. India's democratic system and English language use attract foreign investors, while its digital growth and strategic positioning amid global trade shifts enhance its appeal. Companies like Apple are expanding in India, diversifying supply chains. The U.S. is increasingly engaging with India, viewing it as a viable alternative to China for manufacturing and trade partnerships.

05/05 09:30

Malaysia-U.S. Tariff Negotiations: PM Anwar Ibrahim Highlights Economic Growth Concerns

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05/05 05:29

China's Deflation Risk Grows as U.S. Tariffs Redirect Exports, Triggering Domestic Price Wars

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05/05 05:02

Vietnam Pursues 8% Growth Amid U.S. Tariff Threat, Initiates Trade Talks to Mitigate 46% Export Tariff Impact

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05/02 14:31

Ryanair CEO Michael O'Leary and U.S. Congressman Clash Over Boeing Tariffs and COMAC Deal Amid Trade Tensions

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05/02 01:01

South Korea's Factory Output Hits 31-Month Low Amid U.S. Tariff Impact on Tech and Gaming Industries

South Korea's manufacturing sector contracted sharply in April, with the PMI dropping to 47.5, due to U.S. tariffs affecting global trade and demand for exports like semiconductors. Microsoft and Sony raised console prices due to increased production costs from tariffs. Apple reduced its share buyback by $10 billion, citing tariff-related expenses, and is shifting its supply chain from China to India and Vietnam. These developments highlight the broad impact of U.S. trade policies on global industries.

05/01 17:31

Microsoft, Nintendo, and Sony Increase Console and Game Prices Due to U.S. Tariffs and Rising Costs

Microsoft, Nintendo, and Sony have announced price increases for their consoles and games due to rising production costs and new U.S. tariffs on imports from China and Vietnam. Microsoft's Xbox Series S and X prices rose by 27% and 20%, respectively, with new game prices reaching $79.99. Nintendo's Switch 2 will launch at $449.99, up from the original Switch's $300. Sony increased PlayStation 5 prices in select international markets. These changes reflect a shift in the industry, where prices typically decrease over time, driven by tariffs and higher development costs.

05/01 13:01

Japanese Industrial Leaders Komatsu, Hitachi, and Mitsubishi Forecast Profit Declines Due to U.S. Tariffs

Komatsu Ltd., Hitachi Construction Machinery, and Mitsubishi Electric have revised their fiscal 2025 profit forecasts downward due to U.S. tariffs. Komatsu expects a ¥94 billion profit decline, while Hitachi and Mitsubishi anticipate ¥30 billion each. These companies face increased import costs and disrupted supply chains, impacting Japan's export-driven economy. The Bank of Japan has noted tariffs as a factor in lowering GDP growth forecasts. Japan's trade negotiator is in talks with the U.S. to remove tariffs, but negotiations are challenging, affecting broader industry sentiment and prompting some firms to shift production overseas.

05/01 04:30

Bank of Japan Lowers Growth Forecast to 0.5% Due to U.S. Tariff Impact, Maintains Interest Rates

The Bank of Japan (BOJ) has lowered its GDP growth forecast to 0.5% for the fiscal year ending March 2026, citing U.S. tariffs and weakening global demand. Despite this, the BOJ kept its interest rate target between 0.40% and 0.50%, following a January rate hike. The decision reflects caution amid trade tensions and inflation dynamics. The BOJ's inflation forecast remains near its 2% target, while recent trade talks with the U.S. ended without progress, potentially impacting Japanese exports. The Nikkei 225 index rose 0.54% following the announcement.

05/01 01:30

Meta Faces Ad Revenue Drop as U.S. Trade Policies Hit Chinese Retailers Temu and Shein

Meta Platforms reports a decline in advertising revenue from Chinese e-commerce companies Temu and Shein due to U.S. trade restrictions and the closure of the de minimis tariff exemption. The changes, part of former President Trump's trade policies, include a 145% tariff on Chinese imports and ending duty-free treatment for low-value shipments. This has led to a significant reduction in ad spending by Asia-based exporters, impacting Meta's revenue. The de minimis exemption closure, effective May 2, has forced retailers to restructure and raise prices, further affecting digital ad spending.

South Korea’s Manufacturing Slump Deepens

South Korea’s factory activity fell to its lowest level since September 2022, with the S&P Global Purchasing Managers’ Index (PMI) dropping to 47.5 in April from 49.1 in March. This marks the third consecutive month below the 50-point threshold that separates expansion from contraction, and the steepest decline in 31 months.

The contraction was driven by a sharp fall in output and new orders, both of which posted their largest declines since June 2023. Export orders also fell for the first time since October 2024, registering the biggest drop in nearly two years. According to S&P Global economist Usamah Bhatti, “challenging domestic economic conditions and the impact of U.S. tariffs weighed heavily on the sector, stymieing new product launches and sales in both domestic and external markets.”

The slump comes despite strong trade data released a day earlier, which showed robust semiconductor exports. However, the data also revealed early signs of strain in the automotive sector, another key pillar of South Korea’s export economy.

The downturn in manufacturing sentiment is also reflected in employment and investment indicators. Job cuts in April were the most severe since September 2020, while input purchases and backlogs of work fell at the fastest pace in over two years.

U.S. Tariffs and Political Uncertainty Compound Outlook

The manufacturing decline is closely tied to the reimposition of U.S. tariffs under President Donald Trump’s trade policy. South Korea is currently negotiating a trade package with the United States to avert the full reinstatement of 25% reciprocal tariffs, which are set to resume in July unless a deal is reached.

The outlook among South Korean manufacturers has turned increasingly pessimistic. The degree of business confidence in April was the lowest since June 2020, excluding the COVID-19 pandemic period. This sentiment shift began in December 2024, amid heightened domestic political uncertainty following former President Yoon Suk Yeol’s failed attempt to impose martial law.

Xbox and PlayStation Raise Console Prices Amid Tariff Pressures

The effects of U.S. tariffs are also being felt in the global gaming industry. Microsoft announced on May 1 that it is raising prices on its Xbox Series consoles, controllers, and first-party games across multiple markets, including the United States, Europe, Australia, and the United Kingdom.

In the U.S., the Xbox Series X will now retail for $599.99, up from $499.99, while the Xbox Series S 512GB model has increased from $299.99 to $379.99. The Xbox Series X 2TB Galaxy Black Special Edition now carries a price tag of $729.99, up from $599.99. Microsoft also confirmed that new first-party games will be priced at $79.99 starting this holiday season.

Sony had already raised prices for its PlayStation 5 consoles earlier this year in several non-U.S. markets, citing inflation, exchange rate volatility, and increased manufacturing costs. The PlayStation 5 Pro is now priced around $700 in the U.S.

Both companies attributed the price hikes to rising production costs linked to tariffs on components and manufacturing hubs in China, Japan, and Vietnam. These levies have disrupted supply chains and increased the cost of goods sold, prompting hardware makers to pass on the burden to consumers.

Apple Reduces Share Buyback Amid Rising Costs

Apple Inc. has scaled back its share repurchase program by $10 billion, authorizing a $100 billion buyback for 2025 compared to $110 billion in 2024. The company also raised its quarterly dividend by 4% to $0.26 per share.

CEO Tim Cook cited the impact of tariffs as a key factor in the decision, estimating that trade-related costs could add $900 million to Apple’s expenses in the current quarter. To mitigate these effects, Apple is shifting its supply chain away from China. The majority of iPhones sold in the U.S. this quarter will be sourced from India, while iPads, Macs, and Apple Watches will increasingly come from Vietnam.

Apple reported record earnings for the fiscal second quarter, with revenue of $95.36 billion and net income of $24.8 billion. However, its stock fell approximately 3% in after-hours trading, closing at $213.32 before dipping to around $207.37.

Despite strong performance in iPhone sales and modest growth in Mac and iPad segments, Apple’s services and wearables divisions underperformed slightly. The company also announced plans to expand its U.S. manufacturing footprint, with capital expenditures planned across multiple states including Texas, California, and Arizona.

Broader Implications Across Industries

The developments in South Korea’s manufacturing sector, the gaming industry, and Apple’s financial strategy underscore the widespread impact of U.S. trade policy on global supply chains and corporate operations. As tariffs continue to reshape production and pricing strategies, companies across sectors are adjusting their outlooks and cost structures to navigate an increasingly complex economic landscape.

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