US may buy Intel stake, raising alarm for Samsung, TSMC
Analysts warn that the government support is an apparent push to steer US big tech firms toward Intel, a shift that could erode the market presence of overseas competitors.
Industry sources said Monday that the US government is reviewing plans to acquire a stake in Intel following a recent White House meeting between US President Donald Trump and Intel CEO Lip-Bu Tan.
According to Bloomberg, the Trump administration is weighing the use of funds from the CHIPS Act to buy into Intel, aiming to bolster the ailing firm seen as America's last hope for domestic chip manufacturing. It remains unclear whether this would involve converting some or all of Intel's existing CHIPS Act grants into equity, the outlet added.
'(Trump) can go to these customers like Broadcom, Qualcomm, Apple and Nvidia and say now they (Intel) have the capability, and you need to move more of your orders and production to a domestic leading-edge company like Intel," Mizuho Securities USA Managing Director Jordan Klein said.
Lee Jong-hwan, a system semiconductor engineering professor at Sangmyung University, echoed the view, saying, "it could increase Intel's chances of securing orders from US big tech companies, and if its foundry business gets back on track with government support, that is obviously bad for Samsung's foundry business."
Washington's move to go beyond subsidies and directly purchase equity in Intel highlights the growing extent of government intervention in the global semiconductor race — complicating the outlook for rivals such as Korea's Samsung Electronics and SK hynix.
NH Investment & Securities analyst Ryu Young-ho said in a report Monday that "blatant US support for domestic firms is negative for competitors like TSMC and Samsung Electronics."
"No official announcement came (from Washington), but there are signs that the US government is intervening in companies critical to US industry," Ryu continued.
For example, the US Defense Department recently funded American miner MP Materials in a bid to shore up rare earth production, where it sees strategic weakness.
The Trump administration has also introduced a so-called "export tax," requiring US chipmakers like Nvidia and AMD to hand over 15 percent of revenue from sales to China.
For Intel, the government's intervention could offer critical relief from its financial troubles. Since early 2022, the chipmaker's foundry business has been running at a loss every quarter, with total losses swelling to $19.6 billion as of the second quarter this year. To cope, Intel has been slashing costs and cutting jobs.
With the equity injection, Intel is expected to accelerate construction of its planned semiconductor plant in Ohio. The project, which broke ground in 2022 with a 2025 completion goal, has been pushed back to 2030 amid funding shortfalls.
Still, Intel must convince customers of its competitiveness, Klein said.
In the global contract chipmaking market, Intel holds virtually no share, while TSMC dominates with 67.6 percent of revenue in the first quarter of this year, followed by Samsung at 7.7 percent.
The Wall Street Journal also pointed out that it could weaken the overall competitiveness of the US semiconductor industry if the government pressures companies to use chips from Intel, which has lower yield and production capability when compared to TSMC.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Korea Herald
7 hours ago
- Korea Herald
KHNP, Westinghouse may create joint venture to target global nuclear power market: sources
The state-run Korea Hydro & Nuclear Power Co. and US energy firm Westinghouse Co. have held talks on creating a joint venture to jointly target the recovering nuclear power plant market in the United States and Europe, sources said Thursday. The possibility was discussed as part of efforts to boost cooperation between South Korea and the United States in the nuclear power plant sector, according to the sources familiar with the matter, who noted energy officials from the two countries have held a number of meetings to that end since US President Donald Trump took office. Trump has vowed to expand his country's nuclear energy capacity from the current 100 gigawatts to 400 GW by 2050, which will be equivalent to building some 300 new nuclear reactors. To this end, the US president has signed executive orders that shortened to 18 months the time needed to evaluate and approve new construction and operation licenses. In the recent meetings with South Korea, US officials are said to have asked Korean companies to play an active role in Washington's plan to reinvigorate its nuclear energy industry. US energy officials have also told their Korean counterparts that with the settlement of an intellectual property dispute between the KHNP and Westinghouse, conditions for bilateral nuclear energy cooperation have been established, the sources said. The KHNP and Westinghouse signed the settlement deal in January after the latter accused the Korean firm of infringing on its IP, claiming the KHNP's APR 1000 and APR 1400 plant designs utilize its licensed technology. The deal removed a major hurdle for a KHNP-led Korean consortium to sign a final contract with the Czech Republic in June to build two nuclear reactors in the European country for an estimated 26 trillion won ($18.7 billion). The details of the settlement deal remain undisclosed, but according to industry sources, the bilateral agreement prohibits the KHNP from bidding for new power plant projects in North America and the European Union, except for the Czech Republic. But if the KHNP forms a JV with Westinghouse, the Korean company will be able to take part in projects in the regions as the US company's partner. Market watchers say Westinghouse needs a business partner that has capabilities in construction, equipment procurement and operation, noting the U.S. firm currently remains what they called a "fabless" company that only has original design technology with no construction capabilities. Across the world, South Korea and France are the only countries that have comprehensive nuclear power plant construction capabilities other than Russia and China, they said. The US is still a powerhouse in original technologies for building nuclear power plants but has fallen behind in terms of actual construction capabilities as the country has rarely built a new reactor since 1979, when it experienced a nuclear meltdown accident at a facility on Three Mile Island in Pennsylvania. Earlier this week, KHNP CEO Whang Joo-ho said during a parliamentary committee meeting that his company reached a conclusion that it should focus on targeting the US market rather than the European market, remarks that appeared to be referring to the KHNP's push to enter the American market as Westinghouse's partner. Whang plans to visit the US from Saturday to Wednesday to meet with officials from Westinghouse and two other American energy firms, according to industry officials. "It is true that the KHNP and Westinghouse have been discussing forming a JV for some time," an official said on the condition of anonymity. "But it is uncertain if the two companies will reach an agreement during Whang's upcoming visit to the US." In an apparently related move, Korea Electric Power Corp. CEO Kim Dong-cheol was set to head for the US later Thursday to meet with officials from Westinghouse and American electric power companies, according to company officials. (Yonhap)
Korea Herald
9 hours ago
- Korea Herald
FTA or CPTPP? Seoul-Tokyo summit renews push for economic ties
Neighbors weigh trade frameworks as US tariffs, China rivalry reshape global order Ahead of Saturday's summit between South Korea and Japan, momentum is building for deeper economic cooperation between the neighboring countries. The prospect of reviving the long-stalled bilateral free trade negotiations has returned to the spotlight, with experts and business leaders believing the partnership would benefit both countries' industries and offset prevailing trade uncertainties driven by Washington's tariff policies. The renewed impetus comes as South Korean President Lee Jae Myung is set to visit Tokyo for his first summit with Japanese Prime Minister Shigeru Ishiba, fueling expectations that discussions could move beyond political reconciliation to tangible economic cooperation frameworks. From friction to partnership For decades, Seoul and Tokyo relations were framed by caution, weighed down by long-standing historical issues. But in recent years, the perception has shifted toward being more friendly, attributed to revitalized cultural exchange, increased tourism and more active diplomacy between leaders. President Lee has also made enhanced economic ties with Japan a key priority. This is a notable shift for the liberal Democratic Party of Korea, which has traditionally maintained a more adversarial position toward Japan than its conservative rival, the People Power Party. The diplomatic pivot reflects growing recognition that stronger Seoul-Tokyo ties are crucial for navigating the US' protectionist trade agenda under President Donald Trump. Both Seoul and Tokyo, which are heavily reliant on exports, are searching for a breakthrough after the US, their key trading partner, imposed a 15 percent tariff on all South Korean goods. Core industries such as automobiles have already been hit with the separate levy, while additional tariffs targeting semiconductors and pharmaceuticals are expected to follow. As exports to the US decline, both Seoul and Tokyo are under pressure to safeguard their supply chains and diversify trade partners. 'I believe we have reached a stage where the possibility of an FTA (free trade agreement) or economic cooperation is very high,' said Lee Won-deok, an expert on Japan at Kookmin University in Seoul. 'With Trump in office, strengthening Korea-Japan relations has become important, and what we can do is pursue an FTA.' Park Inn-won, professor emeritus at the College of International Studies at Korea University, echoed the sentiment, noting that global trade headwinds — including Trump's protectionism and the weakening of the World Trade Organization system — leave few alternatives. 'The external environment surrounding Korea and Japan is changing fast, and the positive effects of cooperation now outweigh the negatives that were feared in the past,' Park said. Park added that the Korea-Japan FTA discussions have been ongoing for a long time, and the recent Trump policies are 'acting as a catalyst.' 'Given Korea's level of competitiveness, I believe Korea-Japan cooperation is necessary for supply chain stability," he said. Economic data highlights the need for further tie-ups. According to the Bank of Korea, South Korea's gross domestic product per capita stood at $36,024 last year, surpassing Japan's $32,859 for the third consecutive year after first overtaking it in 2022. The two countries remain stuck in the so-called $30,000 threshold, but the gap underscores how similar the two economies have become. Business leaders have also argued that the two countries could form a $6 trillion to $7 trillion economic bloc akin to the European Union as a solution to stagnant domestic economies, aging populations and rising global trade barriers. Chey Tae-won, chair of the Korea Chamber of Commerce and Industry and SK Group, has been advocating for such a union to create the world's fourth-largest economy, saying the two countries must strengthen cooperation in the artificial intelligence and manufacturing sectors to tackle shared challenges. Observers note that since forming a bilateral FTA could be tough, the more realistic choice could be for Seoul to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Led by Japan, the CPTPP serves as a high-standard FTA among its member nations, which include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the UK and Vietnam. For years, Seoul has sought to join the mega trade agreement, though the previous Yoon Suk Yeol administration's efforts stalled amid fierce resistance from Korea's agricultural and fishing sectors. 'In Korea's perspective, joining the CPTPP is simpler than pursuing a bilateral FTA,' said professor Lee. 'It's a high-level agreement, and it's easier because Korea just needs to enter an already established framework. But for the Korea-Japan FTA, many detailed aspects need to be resolved.' Calls for Seoul to join CPTPP have grown in recent months, with the topic likely to be on the agenda at the bilateral summit. During the latest Korea-Japan Forum held in Seoul on Wednesday, an annual forum launched in 1993 to promote high-level talks between the two countries, the participants agreed on the need for Korea to join the CPTPP. 'With Trump's second term and strategic competition between the US and China, there is a growing consensus on the need for close cooperation between Korea and Japan,' said Yu Myung-hwan, former foreign minister and chair of the Korea-Japan Forum. 'As the global economic order is being reshaped, the two countries must exercise joint leadership in defending the rules-based free trade system. At this forum, all participants agreed on the need for Korea to join the CPTPP at the earliest.' Skeptics warn of the risks of closer economic ties. Korea ran a $17.9 billion trade deficit with Japan in 2024, sparking fears that further opening up could increase the imbalance. A recent report by the Korea Institute for Industrial Economics and Trade cautioned that an FTA at CPTPP-level market opening standards would likely increase Korean imports of cars, petrochemicals and electronics more than it would boost exports to Japan, potentially worsening the trade deficit. 'Measures are needed to prepare for the negative effects of widening trade deficits from a potential Korea-Japan FTA,' Choi Jeong-hwan, research fellow at KIIET, said in the report. 'The economic impact of a Korea-Japan FTA should be assessed comprehensively, going beyond simple trade balance to examine how it would affect consumption, production and welfare of consumers and businesses.'
Korea Herald
10 hours ago
- Korea Herald
China considering yuan-backed stablecoins
China is considering allowing the usage of yuan-backed stablecoins for the first time to boost wider adoption of its currency globally, sources familiar with the matter said, in a major reversal of its stance towards digital assets. The State Council -- China's cabinet -– will review and possibly approve a roadmap later this month for the greater usage of the currency globally, including catching up with a US push on stablecoins, said the sources. The plan is expected to include targets for usage of the Chinese currency in the global markets and outline the responsibilities of domestic regulators, they said, adding that the roadmap will also include guidelines for risk prevention. The country's senior leadership is also expected to meet for a study session as early as the end of this month, focusing on yuan internationalization and stablecoins, which are gaining momentum worldwide, said one of the sources. In that meeting, senior leaders are likely to deliver remarks to set the tone for stablecoins and define the boundaries of its application and development in business, said the source. China's plan for the usage of stablecoins, if approved, would mark a major shift in its approach towards digital assets. The country banned cryptocurrency trading and mining in 2021 due to concerns about the stability of the financial system. China has long aspired for the yuan to achieve global currency status, akin to the dollar or euro, reflecting its weight as the world's second-biggest economy. However, its tight capital controls and its trillion-dollar annual trade surpluses have worked against that aim. Those restrictions are likely to be a key hurdle to the development of stablecoins as well, market participants have said. Stablecoins are a type of cryptocurrency designed to maintain a constant value. They are usually pegged to a fiat currency such as the US dollar and are commonly used by crypto traders to move funds between tokens. The yuan's share as a global payment currency fell to 2.88 percent in June, its lowest in two years, according to payment platform SWIFT. In contrast, the US dollar commanded a 47.19 percent market share. China places strong capital controls to manage flows in and out of the border, with a few connect schemes permitting capital to be deployed in some key offshore market such as Hong Kong. In the US, President Donald Trump backed stablecoins days after his inauguration in January and is establishing a regulatory framework that helps legitimize dollar-pegged cryptocurrencies. Their underlying blockchain technology enables instant, borderless and round-the-clock transfer of funds at low cost, giving stablecoins the potential to disrupt traditional daily money moves and cross-border payment systems. Financial innovation, specifically stablecoins, is viewed by Beijing as a promising tool for yuan internationalization amid the growing influence of US dollar-linked cryptocurrencies in global finance, said the sources. Details of the plan are expected to be unveiled in the coming weeks, with Chinese regulators, including the central bank, the People's Bank of China, being assigned implementation duties, said the sources. Stablecoins backed by the US dollar currently dominate the market, accounting for over 99 percent of the global stablecoin supply, according to the Bank for International Settlements. The latest push comes amid mounting geopolitical tensions with Washington, and the growing use of dollar-backed stablecoins by Chinese exporters. Beijing's latest plans come after a Shanghai regulator last month said it had held a meeting for local government officials to consider strategic responses to stablecoins and digital currencies. In a recent interview, PBOC advisor Huang Yiping told local media that an offshore yuan stablecoin in Hong Kong is "a possibility." Separately, Hong Kong's long-awaited stablecoin ordinance took effect on August 1 and positions the Chinese-controlled territory as one of the first markets globally to regulate fiat-backed stablecoin issuers. China's commercial hub Shanghai is also establishing an international operation center for the digital yuan. According to the sources, Hong Kong and Shanghai will be the main cities to fast-track local implementation of the latest plan. China is expected to discuss expanding the use of yuan and possibly stablecoins for cross-border trade and payments with some countries at the Shanghai Cooperation Organization Summit to be held Aug. 31-Sep. 1 in Tianjin, said the sources. (Reuters)
