Source: Global Times
[Special Correspondent of the Global Times, Han Wen] South Korean media ISPlus reported on the 22nd that with the increasing chaos caused by the US government's "reciprocal tariff", some South Korean companies are considering making investments in the US in a "cry while eating wasabi" manner. This Korean idiom refers to reluctantly doing something. However, more and more South Korean media are questioning whether this approach will be effective? TSMC's recently released 2024 annual report shows that TSMC's new factory in Arizona, USA incurred a loss of NT$14.298 billion (New Taiwan dollars) in 2024, with cumulative losses exceeding NT$39.4 billion over the past four years. The Chosun Ilbo of South Korea reported on the 22nd that this news has deepened the distress of Samsung Electronics, which is building a foundry factory in Taylor, Texas, USA. Although TSMC's American factory has started full-scale operation, its profitability continues to deteriorate due to additional large-scale facility investment and high labor costs. The report expressed concerns, suggesting that the possibility of overseas factories dragging down profits in the medium to long term is significant.
The Chosun Ilbo believes that even TSMC, which almost dominates the foundry market, has incurred massive losses. Given that Samsung Electronics' foundry division, which has not yet successfully attracted major clients, is almost destined to incur losses from the moment production equipment is moved in. Since domestic factories in South Korea also continue to experience quarterly losses, it is expected that Samsung's foundry operations in the US, where production and operational costs are relatively higher, may face an even more unfavorable situation.
According to industry sources in South Korea, as of the 22nd, the construction progress of Samsung Electronics' factory in Taylor, Texas, has reached 99.6%, nearing completion. Normally, equipment should start to be moved in, but Samsung is still hesitating about placing orders. Although the company publicly maintains that the Taylor factory will commence operations according to the original schedule in 2026, insiders both inside and outside the company generally expect that, considering market conditions and order situations, sales figures will be low.
Figure: Samsung Austin Semiconductor Factory in Taylor County, Texas, USA. (Visual China)
In addition, the US government has already announced plans to impose at least a 25% tariff on semiconductors. A source familiar with Samsung Electronics stated that given Samsung's continuous postponement of equipment installation, it is likely to face high tariffs upon moving in. Furthermore, due to difficulties in dispatching the necessary workforce to the US, considerable costs will be incurred in recruitment. To make matters worse, each ASML extreme ultraviolet lithography device costs 500 billion won (approximately 1000 won equals 5.12 Chinese yuan), meaning that tariffs alone could reach several trillion won.
Aside from Samsung Electronics, SK Hynix is also advancing its US factory project. The Newise News Agency of South Korea reported on the 22nd that there are opinions within the South Korean industry that these South Korean enterprises must focus on improving the efficiency of construction and operational costs. With the heightened risks in raw material supply chains and rumors that the US government might cut semiconductor subsidies, the likelihood of encountering massive losses like TSMC significantly increases.
Yonhap News Agency reported that despite the major adverse impact of US auto tariffs, assessments suggest that Hyundai Motor and Kia have temporarily responded well by relying on local inventory. However, the industry generally believes that Hyundai Motor and Kia's existing inventory is expected to be depleted soon, at which point the impact of tariffs will fully manifest. KB Securities predicts that a 25% auto tariff imposed by the US will reduce Hyundai Motor and Kia's operating profits by 3.4 trillion won and 2.3 trillion won respectively.
According to a Reuters report on the 23rd, after Hyundai Steel Corporation announced in late March that it would invest $6 billion in the US, its stock price was continuously sold off by investors. This project is part of Hyundai Motor Group's $21 billion investment plan in the US announced at the White House. Shortly thereafter, the US government announced a 25% tariff on imported cars, with South Korean products not included in the exemption list. At that time, Hyundai Steel was struggling to cope with weak domestic demand and strikes. Since the announcement of the investment, Hyundai Steel's stock price has fallen by 21.2%. Analysts warn that this investment may increase the financial pressure on this struggling steel company, possibly forcing the company to reduce the capacity of the new factory.
Original article: https://www.toutiao.com/article/7496645397088092722/
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