▲ AI PRISM* Personalized Economic Briefing
* Editor's note: AI PRISM (Personalized Report & Insight Summarizing Media) is an AI-based personalized news recommendation and summary service developed with support from the Korea Press Foundation. It selects and provides six tailored news items by reader type.
[Key Issue Briefing]
■ Won Reverses to Strength: The won-dollar exchange rate gave up the 1,400 level for the first time in about 10 and a half months, marking a clear weakening of the dollar. Analysts noted a pattern that runs counter to conventional macroeconomic wisdom, as the won strengthened even as long-term U.S. Treasury yields surged. In the market, the prevailing view interprets the rise in U.S. yields not as an improvement in returns but as a demand for a premium against fiscal risk.
■ Cracks in Memory Confidence: AI memory chip stocks fell sharply across the board on the New York Stock Exchange, dealing a simultaneous shock to South Korea's leading chip stocks. While the surge in long-term Treasury yields is cited as the surface reason, some read it as a sign that cracks have appeared in the AI memory supercycle itself. The sustainability of Big Tech's astronomical AI investment and capacity expansion by China's ChangXin Memory Technologies (CXMT) are being flagged as variables.
■ Foundry Turnaround: Samsung Electronics (005930.KS) is reported to have raised prices on some new foundry (contract chipmaking) orders by up to 15%. Analysts see this as the result of orders shifting to a competitor as TSMC's advanced-process capacity reached saturation. As a result, forecasts have emerged that the timeline for improved profitability at Samsung's long-loss-making foundry business will be moved up.
[News of Interest to Global Investors]
1. Won Firms Despite Surge in U.S. Treasury Yields; "May Reach Mid-1,300s"
- Key summary: In the Seoul foreign exchange market on the 19th, the won-dollar rate closed at 1,397.7, down 14.1 from the previous trading day, falling below 1,400 for the first time in about 10 and a half months since October 2 last year. The move came as expectations spread that the U.S. Federal Reserve would not cut its benchmark rate in September, combined with dollar selling by chipmakers and offshore market participants. The U.S. 30-year Treasury yield rose to 5.31% on the 18th, its highest since 2007, but the market took this as a risk premium tied to a widening fiscal deficit. However, Cho Yong-gu, senior researcher at Shinyoung Securities (001720.KS), forecast that the rate could form a short-term low around late August to September and then rebound to the low 1,400s.
2. Has the AI Memory Supercycle Cracked? Samsung, SK hynix Battered Even as HBM Demand Holds
- Key summary: On the New York Stock Exchange on the 18th, AI memory chip stocks fell sharply across the board, sending the Philadelphia Semiconductor Index (SOX) down 4.98% to 11,992.46. Micron Technology plunged 7.02% to close at $940.76, and in the aftermath Samsung Electronics and SK hynix (000660.KS) fell 7.82% and 9.75%, respectively, based on their closing prices on the 19th. A stalemate in U.S.-Iran negotiations kept oil prices elevated, reigniting inflation concerns, and the U.S. 30-year Treasury yield topped 5.33% during the session. In addition, doubts about the durability of the supercycle grew amid warnings that surging memory prices could pressure returns on AI infrastructure investment, combined with CXMT's expansion of commodity DRAM capacity.
- Key summary: SK hynix said on the 19th that, following a board resolution, it would buy back and cancel in full 40.0434 trillion won worth of treasury shares. The company will purchase 24.07 million common shares through open-market buying over three months from the 20th to November 19, equivalent to 3.3% of total shares outstanding and the largest such move by a listed company in South Korea. The company decided to pursue expanding its shareholder-return funds to more than 50% of free cash flow (FCF), and plans to detail additional measures worth more than 60 trillion won, including a special dividend, around October when it reports third-quarter earnings. SK hynix shares closed at 1.5 million won on the day, about half the 2.919 million won level of June 22.
[News for Reference by Global Investors]
4. China Allows Nvidia H200 Shipments to ByteDance, Tencent
- Key summary: The Financial Times (FT) reported on the 19th, citing sources, that China's ByteDance and Tencent had each brought in 10,000 Nvidia H200 chips in recent weeks. The H200 lags Nvidia's latest chips by at least two generations but is the highest-performing U.S.-made chip among those permitted for export to China. China had controlled imports of U.S.-made AI chips to nurture its domestic semiconductor industry, but is understood to have reversed its stance as securing advanced manufacturing equipment became difficult amid restrictions on exports of extreme ultraviolet (EUV) lithography machines. Actual use faces constraints, however, as authorities require most of the chips to be kept outside the mainland and are directing their use in Hong Kong.
5. First-Half Operating Profit at KOSPI-Listed Firms Surges 254%, Led by Samsung and SK hynix
- Key summary: Among December fiscal year-end firms on the main board, first-half operating profit at the 634 companies covered in a consolidated financial statement analysis came to 388.1532 trillion won, up 254.15% from a year earlier. Samsung Electronics and SK hynix posted combined first-half consolidated revenue of 437.27 trillion won, accounting for 21.86% of the total, with their contribution to operating profit exceeding 60%. Even excluding the two companies, listed firms' operating profit rose 75.61% to 143.2751 trillion won, showing that the profit improvement had spread broadly. Meanwhile, operating profit in the securities industry surged 163.37%, while six sectors including transport and warehousing and entertainment and culture saw operating profit decline.
6. Reuters: "Samsung Electronics Raises Foundry Order Prices by Up to 15%"
- Key summary: Reuters reported on the 18th that Samsung Electronics had in July raised prices on new orders for chips produced on its 4-nanometer SF4 process. Prices for U.S. and Chinese customers rose 10-15% from the previous month, and prices for Taiwanese customers rose 5-10%, with prices for the 5-nanometer SF5 and 8-nanometer processes also rising. Analysts said Samsung's pricing power had increased as TSMC's advanced-process facilities reached saturation amid surging demand for chips for AI accelerators and high-performance computing (HPC). Lee Min-hee, an analyst at BNK Investment & Securities, forecast that the foundry business could turn a profit from early next year if further price increases are carried out.
▶Go to article: Rate Hikes Only Just Beginning as Household Debt Tops 2,000 Trillion Won for the First Time
▶Go to article: Deal Reached With a Minister's Involvement, Yet Samsung Union Demands 12 Trillion Won More and Returns to the Streets
▶Go to article: Lotte E&C Erases Shock of Fully Unsold Bonds, Securing Three Times the Offering in Demand Forecast
