▲AI PRISM* Customized Economic Briefing
*Editor's Note: 'AI PRISM' (Personalized Report & Insight Summarizing Media) is an "AI-based customized news recommendation and summarization service" developed with the support of the Korea Press Foundation. It selects and provides six customized news items by reader type.
[Key Issue Briefing]
■ KOSPI Plunges: The KOSPI plunged more than 10%, triggering the eighth circuit breaker of the year, and the 6,000 line collapsed during intraday trading. The KOSPI's return for the month of July was -28.9%, exceeding both the maximum decline during the 2008 financial crisis (-23.1%) and the Nasdaq's fall during the 2000 IT bubble burst (-22.9%), prompting assessments that this is not a simple correction but an entry into a bear market.
■ Semiconductor Rise: China is taking on the last barrier to localizing semiconductor equipment that it had previously failed to overcome, launching its own development of deep ultraviolet (DUV) lithography equipment. With forecasts that the general-purpose DRAM market share centered on Changxin Memory Technologies (CXMT) will expand to 30% by 2028, the debate over the Korea-China technology gap is reigniting.
■ Waymo Enters: U.S. autonomous driving company Waymo has formalized its entry into the Korean market by establishing a "Waymo Korea" corporation. Amid discussions about the possibility of cooperation with Hyundai Motor (005380.KS), observers say it will take at least six months to commercialize actual services due to domestic autonomous driving regulatory procedures.
[News of Interest to Corporate CEOs]
- Key Summary: The KOSPI plunged more than 10% from the previous trading session on the 28th, triggering the eighth circuit breaker of the year, and the 6,000 line collapsed during intraday trading. The KOSPI's return for the month of July was -28.9%, exceeding both the maximum decline during the 2008 financial crisis (-23.1%) and the Nasdaq's fall during the 2000 IT bubble burst (-22.9%). The primary cause of the decline was the news of China's Changxin Memory Technologies (CXMT) explosive listing and its in-house manufacturing of deep ultraviolet (DUV) lithography equipment, resulting from a combination of global memory oversupply and concerns over the collapse of semiconductor hegemony. On top of this, the rise in Nvidia's credit default swap (CDS) premium and the possibility of a surprise rate hike at the Federal Open Market Committee (FOMC) on the 30th converged, causing investment sentiment to freeze sharply.
- Key Summary: The reason China's deep ultraviolet (DUV) lithography equipment mass production news shocked the market is concern that the barrier in the lithography field—the only area in the semiconductor value chain where China has not achieved self-sufficiency—could be shaken. According to TrendForce, China has already secured self-sufficiency rates of 15-60% in deposition, etching, and cleaning, while its self-sufficiency rate in lithography had previously been nonexistent. This DUV volume is known to be prioritized for supply to Changxin Memory Technologies (CXMT), and Chinese media forecast that the CXMT-centered general-purpose DRAM self-sufficiency rate, currently at 8%, will expand to 30% by 2028. However, some point out that this volume amounts to only five units this year and 20 units next year, which is negligible compared to ASML's supply scale last year (131 units), and that the gap with extreme ultraviolet (EUV) technology still remains.
3. Waymo Establishes Korean Corporation…Domestic Autonomous Driving Ecosystem on Alert
- Key Summary: U.S. autonomous driving company Waymo formalized its entry into the Korean market by completing procedures to establish its domestic corporation "Waymo Korea" on the 24th of this month. Waymo, a subsidiary of Google's parent company Alphabet, operates driverless Level 4 robotaxis commercially in 11 U.S. cities, with cumulative autonomous driving distance reaching 355 million kilometers. However, in Korea, there is no record yet of an application for temporary operation permits or performance certification, and with the performance certification procedure alone taking nearly six months, considerable time will be needed until actual service begins. In the industry, there are observations that this corporate establishment is part of preparations for business with Hyundai Motor, with which Waymo signed an autonomous driving system cooperation agreement in 2024.
[Reference News for Corporate CEOs]
- Key Summary: Nvidia is known to have signed a contract to lease a 1-gigawatt (GW) scale data center being built in Texas, U.S., for 15 years at a scale of up to $50 billion (approximately 73 trillion won). According to the Financial Times (FT), the contract scale is initially $19.6 billion and is expected to expand to up to $50 billion over 30 years upon renewal. The facility is set to be subleased to neocloud (emerging cloud operators) after completion and used as an AI service hub, and Hut 8 also issued $4.3 billion in corporate bonds at an annual interest rate of 6.129% based on this contract. However, following the previously discussed OpenAI data center payment guarantee, this contract is also reigniting the circular financing controversy surrounding Nvidia.
5. U.S. "Power Shortage Relief," Korea "Commercial Rationality"…Interests Align
- Key Summary: The government is reviewing the construction of a liquefied natural gas (LNG) combined cycle power plant in Texas, U.S., as the first project of its $200 billion investment project in the U.S., due to surging U.S. power demand from the expansion of AI data centers. By 2030, U.S. domestic data center power demand is expected to rise to 426 TWh (terawatt-hours), double last year's level, accounting for 9% of total power demand. Solar and wind power are difficult to supply stably around the clock, and nuclear plants take more than eight years just to build, so LNG generation is being cited as an alternative in the short term. Korea is also pushing forward a plan to prioritize building an LNG power plant at its Gwangju mega-fab, and the two countries plan to sequentially announce multiple energy projects by January 2029 within an annual limit of $20 billion.
- Key Summary: The second-quarter earnings of Hanwha Ocean and Samsung Heavy Industries, riding the shipbuilding super cycle, diverged due to differences in currency hedging methods. Hanwha Ocean's second-quarter operating profit was 736.1 billion won, up 98.0% from a year earlier, exceeding market forecasts, while Samsung Heavy Industries' was 325 billion won, up 58.7% but falling short of forecasts. Hanwha Ocean took an open approach fully exposed to exchange rate fluctuations, benefiting from the recent won weakness, while Samsung Heavy Industries maintained a 100% currency hedging strategy that fixes the exchange rate at the time of order placement, so past orders at low exchange rates were reflected in its earnings. Samsung Heavy Industries said profit margin improvements will become visible from year-end, when volumes contracted at exchange rates in the mid-1,400 won to 1,500 won range are reflected in sales.
▶Go to Article: China Chip Phobia Grips the Market
▶Go to Article: BNK, JB Financial Reject Align Partners' Merger Proposal
▶Go to Article: Amid Exchange Rate Variables…Hanwha Ocean, Samsung Heavy Industries See Mixed Earnings
