▲ AI PRISM* Personalized Economic Briefing
* Editor's note: AI PRISM (Personalized Report & Insight Summarizing Media) is an artificial intelligence-based personalized news recommendation and summary service developed with support from the Korea Press Foundation. It selects and provides six news items tailored to each reader type.
[Key Issue Briefing]
■ AI Substrate Expansion: Samsung Electro-Mechanics (009150) decided at a board meeting on the 28th to invest 4.27 trillion won in expanding package substrate production at its Sejong plant, and will add 2.51 trillion won at its Vietnamese production subsidiary, for a total expansion of 6.78 trillion won. Demand for flip-chip ball grid array (FC-BGA) substrates used in AI accelerators and server central processing units (CPUs) has risen rapidly as generative AI spreads, and the investment is being pursued on the basis of mid- to long-term cooperation with global big tech customers, according to sources.
■ China Weighs Nvidia Chip Purchases: The Chinese government has told domestic companies including ByteDance and Alibaba that it plans to approve purchases of Nvidia's new RTX Pro 5500 chip, according to sources. Analysts say Beijing has shifted from a stance that blocked purchases of U.S.-made chips in the name of nurturing its own chip industry to a pragmatic approach that acknowledges gaps in performance, supply and the AI ecosystem.
■ Rate-Driven Won Weakness: U.S. five-, 10- and 30-year Treasury yields surged to their highest levels since 2007 over the Chuseok holiday, renewing upward pressure on the dollar. Inflation concerns stemming from the Middle East, the Federal Reserve's hawkish stance and heavy Treasury supply combined with net selling of Korean stocks by foreign investors, pushing the won-dollar exchange rate above the 1,360 won level.
[News of Interest to Corporate CEOs]
- Key summary: Samsung Electro-Mechanics is making a total of 6.78 trillion won in new investments at its Sejong plant and in Vietnam to strengthen its lead in the AI chip substrate market. The 4.27 trillion won package substrate expansion approved at the board meeting on the 28th is the largest investment tied to a single product in the company's history. The amount equals 43.6% of the 9.7973 trillion won in consolidated shareholders' equity recorded last year. The Sejong investment runs from this month through May 31, 2028, with mass production set to begin in September 2028. The company will also invest 2.51 trillion won in its Vietnamese production subsidiary to build additional production facilities by the end of April 2028. Meanwhile, with sales of AI chip and server components surging, the consensus estimate among brokerages for third-quarter operating profit stands at 605.1 billion won, 2.3 times the figure from the same period last year.
2. Was Huawei Not Enough? China Weighs Allowing Nvidia Chip Purchases
- Key summary: China's Ministry of Industry and Information Technology has told domestic companies including ByteDance and Alibaba that it plans to approve purchases of Nvidia's new RTX Pro 5500 AI chip, The Information reported on the 27th. The product is a workstation chip that, unlike server AI accelerators, uses graphics DRAM (GDDR7) instead of high-bandwidth memory (HBM). Some prospective buyers plan to install eight of the chips in a single server to run large AI models, and ByteDance is considering an order of roughly 1 million units. Nvidia is said to have planned shipments of about 500,000 units per quarter starting at the end of December, but with U.S. President Donald Trump continuing to make remarks aimed at countering China, it remains unclear whether exports will actually be permitted.
- Key summary: In the Seoul foreign exchange market on the 28th, the won-dollar exchange rate closed at 1,365.10 won, up 7.6 won from the previous session's close, after rising as high as 1,365.50 won during the day. According to the Bank of Korea's overseas offices, the yield on two-year U.S. Treasurys stood at 4.85% as of the 25th, up 0.51 percentage points from the end of the previous month, while the 10-year yield was 5.16% and the 30-year yield was 5.49%, with the five-, 10- and 30-year yields all setting new highs since 2007. The rise in yields reflected a combination of inflation concerns tied to tensions in the Middle East, the Fed's hawkish stance and supply pressure after a buyback came to just $4.08 billion, short of the $6 billion limit. Views in the market are split, with JPMorgan, Goldman Sachs and Citi emphasizing supply-driven volatility while Bank of America and Citadel point to structural upward pressure from AI infrastructure investment.
[Reference News for Corporate CEOs]
4. TSMC to Build Five More Advanced Packaging Plants in Southern Taiwan
- Key summary: TSMC, the world's largest foundry, or contract chipmaker, is moving to build five additional advanced packaging (AP) plants, Taiwanese media including Liberty Times Net reported on the 28th. Taiwan's National Science and Technology Council (NSTC) opened online public comment on a plan to expand the Chiayi site on the 24th of this month. The move effectively marks the starting point for the third phase of the Chiayi Science Park plan, which will go through a month of public comment, Executive Yuan review and environmental impact assessment procedures. The third-phase site will use 198.65 hectares of farmland owned by Taiwan Sugar Corporation near Taibao in Chiayi County. If completed as planned, the Chiayi Science Park will house a total of 10 advanced packaging plants, making it the world's largest "advanced packaging capital."
5. CPTPP Membership Would Lift GDP by 0.38 Percentage Points After 10 Years
- Key summary: The Ministry of Trade, Industry and Energy, together with the Ministry of Agriculture, Food and Rural Affairs and other related agencies, released preliminary results of an economic impact analysis on the 28th showing that South Korea's real gross domestic product (GDP) would rise an additional 0.38 percentage points 10 years after joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Production induced in upstream and downstream industries linked to manufacturing items is projected at an annual average of 6.3 trillion to 6.7 trillion won over the 15 years after the agreement takes effect. Of that, 1.1 trillion to 1.2 trillion won would go to small and medium-sized enterprises. By contrast, output in agriculture, forestry and fisheries was projected to fall by an annual average of 852.3 billion won over 15 years, consisting of 710 billion won in agriculture, 60.6 billion won in forestry and 81.7 billion won in fisheries. A government official stressed that with the World Trade Organization (WTO) system effectively hollowed out, there is no reason to delay membership given the clear macroeconomic benefits.
6. Starbucks Even Selling Its Lucrative Japan Unit: Abandoning Asia for North America?
- Key summary: Starbucks is accelerating sales of overseas units and store closures to raise funds for its "Back to Starbucks" strategy. According to Reuters, Starbucks has filed documents with regulators to close 250 underperforming stores in North America and is also weighing the sale of a majority stake in its Japanese unit, valued at about $3 billion (roughly 4 trillion won). The move follows the 2021 sale of its entire 50% stake in its Korean unit and the sale of a 60% stake in its Chinese unit in April this year. Its operating margin fell to 12.9% in the third quarter of this year from 15.8%, the first such decline in two years, as it spent about $1 billion (roughly 1.3 trillion won) remodeling up to 9,000 company-operated stores in North America — a factor cited as the backdrop to the sale considerations.
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