China's Chip Output Quadruples in Decade, Threatening Samsung, SK

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1. China's Chip Output Surges 350% in a Decade… Red Fabs Already Dominate General-Purpose Chips

- Key Summary: The Chinese semiconductor industry produced a total of 484.28 billion integrated circuits last year, a surge of about 350% from 108.72 billion in 2015, a decade earlier. According to the Semiconductor Industry Association (SIA), China's share of mature-process semiconductor production capacity expanded from 19% in 2015 to 33% in 2023, and during this period China accounted for 72% of the increase in global semiconductor production capacity. Accordingly, a survey by the US Commerce Department's Bureau of Industry and Security (BIS) found that only 17% of products in the US automotive, home appliance, and defense sectors contained no Chinese-made semiconductors at all. Meanwhile, industry sources diagnosed that China's low-price offensive is spreading into an existential threat, given that Korea, the world's No. 1 in memory chips, also derives about half of its profits from general-purpose chips.

2. Fears of Massive US Treasury Sell-off… Joint Front to Halt Yen Weakness for First Time in 28 Years

- Key Summary: As the yen-dollar exchange rate soared to the 163.9-yen range during trading on the 29th of last month, falling to its lowest level since 1986, the Japanese government and the Bank of Japan intervened to buy yen on the 30th and 31st in succession. The US Treasury also conducted a rate check through the Federal Reserve Bank of New York and bought yen by selling euros, marking the first joint US-Japan intervention in 28 years since 1998. Japanese media estimated the scale of the Japanese authorities' intervention at 6 trillion to 7 trillion yen (about 55 trillion to 64 trillion won), while Bloomberg estimated it may have reached as much as 8.45 trillion yen, and the US was reportedly considering yen purchases of up to $10 billion (about 1.57 trillion yen). US Treasury Secretary Scott Bessent is analyzed to have been concerned that a prolonged yen weakness could lead to sales of US Treasuries by Japanese institutional investors.

3. Won Appreciates 8.8% in a Month… Largest Gain Since Financial Crisis

- Key Summary: The won-dollar exchange rate stood at 1,424.0 won on a closing basis on the 31st of last month, down 125.4 won from the end of June, recording an appreciation rate of 8.81%. This is the largest decline and highest appreciation rate since March 2009 during the global financial crisis, analyzed as the result of a combination of the currency conversion of SK hynix's American depositary receipt (ADR) issuance proceeds, dollar selling by exporters, and yen strength following the US-Japan yen intervention. During the same period, the Brazilian real appreciated 2.21%, the Australian dollar 2.03%, and the Japanese yen 1.36%, meaning the won's appreciation was about twice as large as major currencies. Steven Chu, an economist at Bloomberg Intelligence, diagnosed that the won has room for further strength as a high-beta currency that heavily reflects market herding, while Lee Min-hyeok, an economist at KB Kookmin Bank, forecast that the won-dollar rate could fall below 1,400 won in the second half.

4. 15 Months After Securing Land… Samsung Electro-Mechanics to Launch New Philippines MLCC Plant Early

- Key Summary: Samsung Electro-Mechanics has set a goal to begin operating its third multilayer ceramic capacitor (MLCC) plant, under construction in Calamba, Laguna Province, the Philippines, from late in the first quarter of next year, just 15 months after securing the land. The new plant is set to be used as a dedicated production facility for high-capacity 47-microfarad (㎌) AI MLCCs installed in Nvidia's new accelerator "Vera Rubin" and its successor "Feynman." Samsung Electro-Mechanics said in its earnings conference call on the 30th of last month that it had signed long-term agreements (LTAs) with more than 10 companies, including top-tier hyperscalers, and based on this plans to expand MLCC production capacity by up to 20% annually by simultaneously expanding its Busan plant. The industry expects Samsung Electro-Mechanics' capital expenditure (CAPEX) to double from 3 trillion won this year to 6 trillion won next year.

5. Secret Factory Without Even a Sign… It Was the Epicenter of the DUV Shock

- Key Summary: Reports that Shanghai-based semiconductor equipment maker Yuliangsheng has begun mass production of a domestically made deep ultraviolet (DUV) lithography system triggered a sharp global plunge in semiconductor stocks. Yuliangsheng is 50%-owned each by a venture capital firm under the Shanghai municipal government and by SiCarrier, which has close ties to Huawei, and the state-owned enterprise SiCarrier — cited as the epicenter of the ASML shock — uses the same address, prompting observations that it is effectively a state-led project. The US has kept China's semiconductor rise in check for over a decade with advanced equipment such as lithography systems since the first Trump administration, but the industry diagnoses that the situation has changed with this DUV mass production. A domestic semiconductor equipment industry source explained that, given the substantial maintenance and repair know-how accumulated in the equipment localization process, this case could become a turning point in narrowing the technology gap going forward.

6. HD Hyundai Electric's Preemptive US Investment Pays Off… Produces 1,000th Extra-High-Voltage Transformer

- Key Summary: HD Hyundai Electric held a ceremony on the 31st of last month at its North American production subsidiary in Alabama to mark the shipment of its 1,000th product, a 500kV, 675-megavolt-ampere (MVA) extra-high-voltage transformer. Since establishing the first North American production subsidiary in the domestic industry in 2011, the cumulative production capacity of transformers supplied over 15 years is about 200 gigavolt-amperes (GVA), a scale capable of covering the power demand of about 130 million US households. According to global power market research firm Goulden Reports, HD Hyundai Electric held the No. 1 spot for two consecutive years in the US market for extra-high-voltage transformers of 100 MVA or more, with a market share of 17.2% in 2024 and 25.7% in 2025. Meanwhile, KOTRA analyzed that supply shortages are continuing, centered on step-up transformers for power generation and power transformers, as demand for power equipment in the US outpaces the expansion of production capacity.