▲ 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]
■ Japan-Taiwan Chip Alliance: With TSMC's plant in Kumamoto as a catalyst, Taiwanese partner firms are moving into Japan one after another, and Kyushu is re-emerging as a "Silicon Island." Large-scale support from the Japanese government is combining with a dense ecosystem of materials, parts and equipment suppliers, and cooperation between the two sides is spreading beyond chip manufacturing into physical AI.
■ Won Strengthens Alone: The won has posted the largest appreciation among major currencies since July, pushing the won-dollar exchange rate to its lowest level in 11 months. Analysts attribute this to a combination of dollar supply from strong chip exports, dollar selling by companies and the Bank of Korea's hawkish stance.
■ Bonds Rally in Tandem: Despite caution ahead of the Monetary Policy Board meeting, net purchases of government bond futures by foreign investors pushed treasury bond yields lower across all maturities. However, analysts note that supply pressure remains, as some observers expect treasury bond issuance from next year onward to exceed earlier forecasts.
[News of Interest to Global Investors]
1. Following TSMC to Kyushu: A Tighter Japan-Taiwan Chip Alliance
- Key summary: The chip alliance between Taiwan and Japan, which began with Taiwan's TSMC building a plant in Kumamoto Prefecture, Japan, is spreading across the entire island of Kyushu. Itochu Techno-Solutions, a subsidiary of Itochu Corporation, recently established a joint venture in Fukuoka with Systex, Taiwan's largest system integration (SI) company. The joint venture will handle system development and network equipment procurement for Taiwanese firms entering Japan. Approvals for Taiwan's direct investment in Japan rose from 99 cases in 2024 to a record 128 cases in 2025, and the Japanese government plans to invest 68 trillion yen (about 591 trillion won) in semiconductors through public and private funding by 2040. TSMC has begun building its second plant in Kumamoto and plans to invest 1 trillion yen with Sony to mass-produce next-generation image sensors from 2029. As a result, cooperation between the two sides is broadening into physical AI.
2. Won and Bonds Strengthen Ahead of Rate Meeting; Citi Sees Larger Treasury Supply Next Year
- Key summary: Along with the won's appreciation, treasury bond yields in the domestic bond market fell across all maturities. In the Seoul foreign exchange market on the 24th, the won-dollar exchange rate closed at 1,382.4 won, down 4.1 won from the previous session, and fell as low as 1,376.5 won intraday, setting a new yearly low. The three-year treasury bond yield fell 0.018 percentage point to 3.836%, and the 10-year yield fell 0.041 percentage point to 4.335%. Citi raised its forecast for total treasury bond issuance to 221 trillion won in 2026 and 211 trillion won in 2027, higher than its previous projections, noting that excess tax revenue is more likely to go first to a future-response fund than to reducing treasury bond issuance, leaving limited room for supply to fall.
3. Chip Exports, Hawkish BOK and Corporate Demand Combine to Strengthen the Won
- Key summary: The won posted the largest appreciation among major currencies since July. According to Bank of Korea data, the won appreciated 11.90% against the dollar from July 1 to August 21, ranking first among the currencies surveyed. That far exceeded the second-place Norwegian krone (6.03%) and widened the gap with the British pound (2.87%), the euro (2.32%) and the Japanese yen (2.31%). With the first-half current account surplus reaching $191 billion, dollar sales in spot and forward transactions by non-financial private companies in the second quarter also surged 71.5% from a year earlier to $263.59 billion. In a Seoul Economic Daily survey, 13 of 20 experts forecast an additional 0.25 percentage point hike at the Monetary Policy Board meeting on the 27th, with expectations of a "back-to-back hike" prevailing.
[News for Global Investors' Reference]
4. Muscle Preserved, Only Fat Lost: A Game Changer for the 135 Trillion Won Obesity Market
- Key summary: The race to develop obesity drugs is shifting away from a focus on single glucagon-like peptide-1 (GLP-1) agonists toward multi-agonists and novel mechanisms. The pharmaceutical market research firm IQVIA forecast that the global obesity drug market will grow to $97.8 billion (about 135 trillion won) by 2034. HM17321, which Hanmi Pharmaceutical (128940) licensed out to Genentech, targets urocortin 2 (UCN2) rather than GLP-1, aiming to reduce fat and build muscle at the same time, and is described as able to address the loss of lean body mass seen with existing GLP-1-class drugs. Meanwhile, competition over dosing convenience is also heating up, with oral drugs, once-monthly injections and microneedle patches.
5. LG H&H Sells U.S. Unit Avon, Reshapes North American Business
- Key summary: LG Household & Health Care (051900) agreed to sell The Avon Company, which it acquired for 145 billion won in April 2019, for 8.3 billion won. LG H&H's North American corporation signed a share purchase agreement on the 24th to transfer its 100% stake in Avon to Stratford Worldwide, an affiliate of the global investment firm Regent. Avon, which relied mainly on door-to-door sales, failed to keep up with changing consumer trends and posted losses every year from 2021 onward, and LG H&H, unable to recover a $205.5 million loan, decided to convert the entire amount into equity. As a result, the company plans to reshape its North American business around retail- and digital-based K-beauty and wellness brands such as Dr. Groot, Belif and CNP.
- Key summary: Park Hyeon-joo, chairman of Mirae Asset Group, expressed confidence in DigitalX (formerly Korbit), the cryptocurrency exchange he recently acquired, telling Seoul Economic Daily on the 24th of a "seismic shift." From that day, DigitalX will offer zero trading fees on all won-market tokens for one year, and the chairman characterized the move, amid concerns over a price war, as a "customer alliance." According to CoinGecko, Upbit and Bithumb hold about 98% of the domestic market, while DigitalX remains at around 0.5%. Mirae Asset Consulting fully subscribed to a third-party allocation of new shares worth about 50 billion won, raising its stake to 97.15%, with a plan to grow DigitalX into a platform spanning security token offerings (STO) and the tokenization of real-world assets (RWA).
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