Investing in Chinese mutual funds in Samsung Electronics to 'respond' to US regulations

A Chinese mutual fund investment in Samsung Electronics has begun to respond to the US semiconductor chip regulation law.
China's Securities Regulatory Commission has approved China's first mutual fund to invest in Samsung Electronics, Reuters reported on the 10th, citing a fund official.
"The approval came amid rising geopolitical tensions between the world's two largest economies," the news agency reported. The fund applied for regulatory approval on August 9.”
Huatai Fine Breeze Fund said, "China and South Korea's semiconductor industries are expected to be tightly integrated. It is expected to benefit from China's accelerated pace of self-sufficiency in technology amid US sanctions and create marketing synergies. ," Reuters said, citing unpublished marketing data.
This exchange-listed fund (ETF), whose launch date has not been determined, plans to invest in Korean semiconductor companies such as Samsung Electronics and SK Hynix, as well as Chinese chip-making conglomerates such as China Semiconductor Manufacturing International Corporation and Montage Technology.
The China-Korea Semiconductor Index (CSI KRX), a new ETF approved by the China Securities Commission, was signed by the Shanghai Stock Exchange and the Korea Exchange (KRX) last year to promote cross-border investment between the two markets.
Taiwan's TSMC announced on the 7th "September sales of 208.24 billion Taiwanese dollars," surpassing Samsung Electronics to become the number one semiconductor company.
TSMC's total sales in the third quarter (July-September) was 613.143 billion Taiwanese dollars (27,487.2 billion won), a rapid growth of 48% compared to the same period of the previous year.
Samsung Electronics did not disclose semiconductor sales in the third quarter's provisional sales of 76 trillion won.
Domestic securities companies presented Samsung Electronics' semiconductor sales in the third quarter of '23,357 trillion won to 25.523 trillion won,' creating a gap of more than 2 trillion won with TSMC.
In connection with the sharp decline in Samsung's flagship DRAM semiconductor, demand for personal computers turned into a sharp plunge in corona sales, slowing consumer spending on electronics, and "sliding at the fastest pace in decades," the Wall Street Journal reported 10. reported the day.
"Worldwide shipments of personal computers in the third quarter fell 19.5% from a year ago, the steepest decline in more than 20 years," the WSJ said. decreased significantly,” he said.
TSMC, led by foundry (semiconductor consignment production), is more profitable than Samsung Electronics in IDM, so the gap is expected to widen further.
In the third quarter of this year, TSMC's operating profit margin was about 47-49%, and Samsung Electronics' second-quarter profit margin was 35%.
At Samsung Electronics, memory semiconductors such as DRAM account for 74% of total semiconductor demand.
The Chip and Science Act (CHIPS Act), signed on Aug. 9 by US President Joe Biden to help secure domestic chip supply, provides US$5.27 billion for US semiconductor research, development, manufacturing, and workforce development.
The law also provides for $39 billion in manufacturing incentives, including $2 billion for traditional (legacy) chips used in automotive and defense systems; • $1.32 billion in R&D and human development; • $500 million in research and design to provide international information and communications technology security and semiconductor supply chain activities such as packaging and distribution; • Includes a 25% investment tax deduction on the capital cost of manufacturing semiconductor-related equipment.

The U.S. Bureau of Industry and Security (BIS) has begun to strictly control exports of semiconductors and semiconductor technologies under Category 3 of the Export Administration Regulations (EAR) Commerce Control List (CCL).

On August 15, BIS announced an official ban on the export of four technologies directly related to semiconductor manufacturing.

The four banned technologies include two substrates of ultra-wide bandgap semiconductors, gallium oxide and diamond; Electronic Computer Aided Design (ECAD) software for the development of integrated circuits in GAAFET structures.

The US CHIPS Act and stricter export controls covered a wide range of Chinese end-uses and end-users to have a direct impact on Chinese companies.

Samsung Electronics submitted an interim plan to the U.S. local government in May to invest $200 billion (250 trillion won) in new and expansion of 11 semiconductor factories in Texas, U.S. over the next 20 years, Money Today confirmed on July 22. did.

On the 11th, Samsung Electronics tentatively counted its sales in the third quarter of this year to 76 trillion won, up 2.73% from the same period a year earlier, and its operating profit to drop by 32.73% to 10.8 trillion won.

Samsung Electronics is currently investing $17 billion (20 trillion won) in Taylor City to start construction of a new foundry plant in the second half of this year in two additional foundry plants in Austin, Texas, as a semiconductor business site operated locally in the United States.

With the $200 billion additional investment plan, two factories are being built with an investment of $24.5 billion (32 trillion won) in the Austin plant site, and nine additional plants are being built with an investment of $167.6 billion (220 trillion won) on the Taylor plant site.

Semiconductor analyst Dyron Patel told Bloomberg, "The United States has launched a preemptive strike, and China is committed to a counterattack. The two countries are now officially entering an 'economic war'. said 10 days.

The Biden administration announced on the 7th a wide range of export controls, including a ban on exports of certain semiconductor chips to China.

Bloomberg reported on the 10th that “the Netherlands is holding the key to winning.“