China's CATL Successfully Debuts on Hong Kong Stock Exchange
Boldly Excludes U.S. Capital in IPO Process
Will This Signal a Revival for Hong Kong's Sluggish Capital Market?

The world’s largest battery maker, China’s CATL (Contemporary Amperex Technology Co. Limited), which was seen as the biggest IPO of the year globally, has successfully made its debut on the Hong Kong Stock Exchange. Despite choosing the Regulation S route, which prohibits U.S. capital from participating, CATL saw a strong surge in its stock price on the first day of trading, marking a successful public offering. Market analysts view CATL’s IPO as a potential bellwether for other Chinese companies planning to list in Hong Kong.

CATL's IPO a Big Hit in Hong Kong

According to Bloomberg and other foreign media outlets on May 20 (local time), CATL’s stock opened at USD 37.89, up 12.5% from its IPO price, and closed at USD 39.20, a 16.4% gain. This performance notably exceeded the stock price recorded on the Shenzhen Stock Exchange the same day, USD 36.95. Typically, Chinese companies with dual listings in the mainland and Hong Kong tend to have lower prices in the Hong Kong market, making CATL’s strong showing an unusual case.

Previously, CATL successfully raised USD 4.57 billion by selling 136 million shares at the top of its price range, USD 33.66. Initially targeting around USD 3.97 billion, the company expanded the offering due to overwhelming demand. Major investors included Sinopec, the Kuwait Investment Authority, the Qatar Investment Authority, Hillhouse Investment, and Oaktree Capital. CATL plans to invest around 90% of the funds raised into its battery plant, which is currently under construction in Hungary.

Analysts remain bullish on CATL’s stock. Johnson Wan, Head of China Industrial Research at Jefferies Hong Kong, stated, “Given CATL’s price-to-earnings ratio (PER) of 17, the stock still has room to rise by 50%. It’s an obvious buy.”

Regulation S Strategy to Bypass U.S. Involvement

Market watchers are focusing on CATL’s bold strategy to exclude U.S. capital while still pulling off a highly successful IPO, signaling the potential of the Hong Kong market. In January, the U.S. Department of Defense added CATL to a list of Chinese companies allegedly aiding the modernization of the Chinese military. In April, U.S. lawmakers publicly called on American banks like JPMorgan and Bank of America to withdraw from the CATL IPO.

In response, CATL opted for a Regulation S offering. Regulation S is a provision under U.S. securities law that allows companies to issue securities outside the United States and exempts them from SEC regulation, provided that U.S. investors are excluded. This contrasts with the concept of ADRs (American Depositary Receipts), which are subject to U.S. regulation. Terence Chong, director of the Global Finance Institute at the Chinese University of Hong Kong, noted, “Since there was ample demand for CATL’s shares, the exclusion of U.S. investors did not significantly affect the success of the IPO.”

Hope for a Revitalized Hong Kong Capital Market

CATL’s successful debut could act as a positive catalyst for other Chinese firms considering listings in Hong Kong. Companies reportedly preparing for IPOs include major memory chipmaker CXMT, pharma company Jiangsu Hengrui Medicine, food producer Foshan Haitian Flavoring & Food, EV maker Seres Group, beverage company Eastroc Beverage, and autonomous logistics firm Westwell.

The listing wave could breathe new life into Hong Kong’s long-stagnant financial market. The Hang Seng Index has declined for four consecutive years from 2020 to 2023, with a 14% drop in 2023 alone. In contrast, other major indices such as the Nasdaq and S&P 500 rose between 20% and 40% over the same period. Asian markets like Japan’s Nikkei 225 (28%), Taiwan’s TAIEX (27%), Korea’s KOSPI (18%), and India’s Sensex (18%) also saw solid gains.

The IPO market in Hong Kong had nearly frozen. In 2023, IPOs raised just USD 5.89 billion , down 56% year-over-year and the lowest level since the dot-com bust in 2001. Only 67 companies went public (an 80% decrease), and just 13 companies raised over USD 128 million. Alternative investments, such as private equity and venture capital, also shrank sharply. According to financial data firm Preqin, alternative investment funding in Hong Kong fell 81% from 2021 levels and 66% from 2022.

As market activity dwindled, many local brokerages in Hong Kong were forced to close. Bloomberg reported that 49 securities firms shut down in 2022, and around 30 more followed in 2023. Staff cuts at global investment banks like JPMorgan and UBS disproportionately affected their Hong Kong operations. Once considered one of the world’s top three financial hubs alongside New York and London, Hong Kong's status has plummeted.

The Most Significant Realignment Since the 2020 Withdrawal
Brexit Created New Borders, Causing a 21% Drop in Exports
UK Finance Minister: "₩168 Trillion Economic Benefit Over 15 Years"

Five years after their historic split, the United Kingdom and the European Union are charting a new course together—one that puts pragmatism ahead of past politics. On May 19, leaders from both sides gathered in London to reset their post-Brexit relationship, sealing a broad agreement that promises to ease economic friction, reforge defense ties, and boost regional stability.

The recalibration comes amid a shifting global landscape: Russia’s war in Ukraine continues to destabilize Europe’s security architecture, while U.S. President Donald Trump’s return to the White House has reignited anxieties over weakened transatlantic cooperation. With economic pressures mounting and uncertainty on the rise, the UK’s Labour government led by Prime Minister Keir Starmer has made a strategic bet—that closer ties with the EU can deliver both security and prosperity without reigniting the divisive debates of the Brexit era.

A Renewed Strategic Partnership in a Volatile World

At the London summit, Prime Minister Starmer, European Commission President Ursula von der Leyen, and European Council President António Costa presented a united front. Starmer declared, “Now is the time to move forward,” urging both sides to leave behind “outdated debates and political squabbles” in favor of common-sense, practical solutions that serve their citizens. Describing the agreement as a “win-win,” he emphasized that it marks the beginning of “a new era” in UK-EU relations.

Von der Leyen echoed the sentiment, calling the day “tremendous” as both sides “turn a page and open a new chapter.” She highlighted the urgency of the moment, stating, “In an age of global instability and as our continent faces its greatest threats in generations, we Europeans must stand together. A strong EU-UK relationship is fundamentally important to our security, prosperity, and shared destiny.”

This sentiment reflects the evolving geopolitical reality. Russia’s aggression has made collective defense in Europe more urgent, while Trump’s renewed isolationism has cast a shadow over NATO’s cohesion. For the UK, which formally left the EU in 2020, a return to economic and security alignment is not just diplomatic—it’s essential. The Labour government now faces a critical test: can easing trade barriers with the EU be the breakthrough needed to reverse years of sluggish growth?

Financially, the stakes are significant. The UK government anticipates that the agreement could generate £90 billion (₩167.8 trillion) in economic benefits by 2040. Although Starmer initially cited a lower figure of £9 billion, Treasury Secretary Darren Jones clarified that the long-term gains—aggregated over 15 years—are expected to reach £90 billion. This projection has bolstered hopes that closer integration with Europe might help the UK regain its economic footing after years of turbulence.

Easing Borders, Rebuilding Trust, and Sharing Security

One of the most impactful components of the agreement lies in its extensive easing of trade regulations. Since Brexit, the return of practical border controls has deeply affected commerce. According to The New York Times, UK exports to the EU dropped by 21%, and imports by 7%. The new deal seeks to reverse this by eliminating routine border checks on animal- and plant-based products and re-aligning with EU standards. This change will reduce bureaucracy, cut costs, and open markets for key British sectors.

Farmers and food producers, particularly hard-hit by post-Brexit red tape, are set to benefit from streamlined safety certification. British producers can now export fresh food—such as seafood and burgers—once again, and the EU’s ban on chilled meat products like sausages and minced beef from the UK will be lifted. The agreement also promises to save British steel producers £25 million annually by aligning with EU regulations.

In exchange, the UK agreed to extend its existing fisheries agreement with the EU by 12 years, allowing EU boats continued access to British waters until 2038. Though fishing represents just 0.4% of the UK’s GDP, the sector has long carried symbolic weight for Brexit supporters who championed sovereignty over national waters.

Beyond economics, the agreement makes significant strides in defense and security. The UK will regain access to the EU’s €150 billion rearmament fund, a move made possible by re-entering collaborative security frameworks. Central to this is the EU’s upcoming SAFE (Security Action For Europe) initiative, which aims to pool resources for joint arms procurement. British defense firms are now eligible to participate, with potential profits estimated at £10 billion. Specific terms, including financial contributions, remain under negotiation.

The two sides also pledged deeper cooperation in security areas ranging from cyber and maritime defense to support for Ukraine and joint space initiatives. Notably, collaboration on military mobility—critical in a time of heightened tension with Russia—is back on the table.

The agreement extends beyond military and economic considerations to human mobility and education. UK citizens will soon be able to use automated e-gates when traveling to EU countries, and both sides agreed to ease visa restrictions for young adults aged 18–30. This will allow temporary work and residence across borders. Additionally, the UK will seek to rejoin Erasmus+, the EU’s flagship student exchange program—further signaling a return to softer, people-centered diplomacy.

Resistance at Home, But a Clear Path Forward

Despite the agreement’s breadth and projected benefits, it has not gone unchallenged. Within the UK, Brexit hardliners have voiced fierce opposition. Nigel Farage, head of the far-right Reform Party and a leading figure in the Brexit campaign, denounced the deal as a “dreadful surrender.” He accused the government of betraying British fishermen and warned that the extension of fishing rights would “spell the end of the fishing industry.” Though economically marginal, fisheries remain a symbolic pillar of Brexit identity.

Former Prime Minister Boris Johnson joined the criticism, remarking in a media interview, “I don’t understand why Keir Starmer is throwing himself into the arms of the uncompetitive, low-growth EU.” His remarks reflect a lingering resistance among parts of the political establishment to rekindling close ties with Europe.

Yet these criticisms are unlikely to derail the agreement. Starmer’s Labour Party commands a dominant majority in Parliament, holding 411 of the 650 seats. As such, the deal is expected to pass without major obstacles.

David Henig, a researcher with the European Centre for International Political Economy, put the debate into perspective. “Most people in the UK will now feel it’s time to move on,” he said. “EU regulations will always spark some controversy, but for a country like the UK, which conducts 50% of its trade with the EU, complete decoupling is simply not a realistic option.”

In the end, the new agreement reflects more than diplomatic compromise—it signals a maturing of the post-Brexit relationship. Faced with shared global threats and domestic economic pressures, the UK and EU are no longer adversaries across a Channel of ideology. Instead, they are cautiously rediscovering common ground, not by resurrecting the past, but by building a future driven by mutual interest, stability, and strategic realism.

Trump Voices Optimism After Talks with Putin
Putin Repeats Stance: “Root Causes of the Crisis Must Be Addressed”
Ukraine Stresses the Need for a High-Level Summit

In a highly anticipated diplomatic move, former U.S. President Donald Trump held a two-hour phone call with Russian President Vladimir Putin to discuss the ongoing war in Ukraine. Trump emerged from the conversation with confidence and optimism, proclaiming that peace talks between Russia and Ukraine were imminent. But as the dust settled, it became clear that the conversation produced more headlines than results. With President Putin offering no deviation from his entrenched narrative, and global media casting doubt on the impact of the exchange, critics have begun to question whether the former president’s efforts are truly advancing the path to peace—or simply spinning in place.

Trump Expresses Optimism While Hinting at Exit Strategy

According to Reuters and multiple international outlets, the extended May 19 conversation between Trump and Putin focused primarily on restarting stalled peace negotiations between Russia and Ukraine. Following the call, Trump declared via Truth Social, his social media platform, “I believe the conversation with President Putin went very well,” adding confidently, “Russia and Ukraine will immediately begin negotiations toward a ceasefire and, more importantly, an end to the war.”

Trump framed the peace effort as a bilateral matter, stressing that “conditions for negotiations must be agreed upon between the two countries.” His remarks clearly signaled a preference for direct talks between Moscow and Kyiv, rather than continued Western-led mediation. He also projected a post-war economic vision, claiming Russia has “tremendous opportunities to generate jobs and wealth” and expressing agreement with Putin's supposed desire for large-scale U.S.-Russia trade once the conflict ends. Ukraine, he noted, would also be a “major beneficiary of trade during the national reconstruction process.”

However, Trump tempered his optimism with a conditional warning. If meaningful progress is not made, he indicated he may step away from the issue entirely. “If it doesn’t seem like negotiations will happen, I will back away,” he told reporters. Still, he voiced belief that Putin was serious about ending the conflict. “If I thought President Putin didn’t want to end this, I wouldn’t have even brought it up—I would have just stepped aside.”

This dual messaging—hopeful engagement paired with the threat of withdrawal—was seen by some observers as strategic posturing. For others, it was a reflection of the uncertainty surrounding Trump's role in the conflict and his limited leverage in influencing the Kremlin.

Putin Digs In, Media Dismantles Trump’s Narrative

While Trump portrayed the exchange as a breakthrough, Putin made no such commitments. Instead, the Russian leader reiterated familiar grievances, blaming Ukraine and the West for provoking the war. At a press briefing following the call, Putin said Russia was prepared to offer a memorandum to Ukraine proposing a framework for peace talks and would consider a ceasefire “if an appropriate agreement is reached.” However, he insisted that “the key issue is addressing the root cause of the crisis”—a phrase echoing Russia’s long-held claim that the expansion of NATO and Ukraine’s aspirations to join the alliance represent a direct threat to Russian sovereignty.

This stance dashed hopes for immediate progress, and media across the U.S. and Europe responded with sharp criticism. The New York Times accused Trump of “distancing himself from Ukraine’s ceasefire demands,” and argued that his support for bilateral talks effectively aligned him with Putin’s rejection of an immediate ceasefire. The Washington Post contended that the call “helped Russia avoid blame for refusing an unconditional ceasefire,” portraying the exchange as a political smokescreen. CNN offered an even harsher analysis, stating that Putin had shown “he doesn’t really need Trump,” suggesting the call did more to reinforce the Russian leader’s position than to disrupt it.

Across the Atlantic, The UK’s Telegraph took issue with Trump’s focus on economic prospects rather than the human cost of the war. It argued that the former president “appeared more interested in trade opportunities with Russia than in understanding why the Ukraine war erupted in the first place,” effectively accusing him of sidelining moral considerations in favor of future business dealings.

Putin’s defiance and the scathing international coverage raised further doubts about Trump’s strategy. By insisting that the West is responsible for the conflict while avoiding meaningful concessions, the Kremlin has signaled that it is not prepared to meet Ukraine’s core demands—particularly those related to sovereignty, territorial integrity, and security guarantees.

Zelensky Urges Collective Action and U.S. Involvement

In contrast to Trump’s unilateral optimism and Putin’s blame-shifting, Ukrainian President Volodymyr Zelensky offered a measured but firm response. Speaking at a press conference on May 19, Zelensky confirmed that Ukraine was ready to review any memorandum or formal proposal Russia might offer, noting that Ukraine would “examine it and establish our own vision accordingly.” He emphasized that Kyiv remains open to a diplomatic process—but only under conditions that respect Ukrainian sovereignty and do not reward Russian aggression.

Importantly, Zelensky proposed a high-level multilateral summit, inviting not only Ukraine and Russia but also the United States, European Union, and United Kingdom to participate. The aim is to create international pressure on Russia and ensure that peace talks are not dominated by bilateral compromises that ignore global security interests. Observers interpret this move as a strategic shift—Zelensky seeking to anchor negotiations in a broader international framework that prevents Russia from controlling the narrative.

Zelensky also made it clear that U.S. involvement remains critical. “Only Putin benefits from America stepping away from mediation,” he warned. “It is vital for all of us that the United States remains actively engaged in peace discussions.” His remarks were a direct response to Trump’s suggestion that he might “back away” if talks stall—an implicit appeal to Washington to maintain leadership in peace efforts, regardless of political shifts.

The Ukrainian leader also drew a red line around territorial sovereignty. He unequivocally rejected any conditions that would require Ukrainian forces to withdraw from the four regions currently under partial Russian occupation. “We will not accept any conditions requiring Ukrainian forces to withdraw from territories under our control,” he said. “Russia continues to make such demands even though they know we will not accept them.” He concluded with a blunt assessment: “This proves that they do not truly want peace.”

The Trump-Putin call has reignited global attention, but it has also exposed the deep and persistent divides that still define the Russia-Ukraine war. While Trump has positioned himself as a would-be peacemaker, the realities on the ground—and the rhetoric from the Kremlin—suggest that substantive progress remains elusive. With Ukraine holding firm and the international community watching closely, the path to peace will demand more than optimism. It will require accountability, collaboration, and an unwavering commitment to justice.

U.S. House: "Alibaba Symbolizes Chinese Communist Party Strategy"
Concerns Apple May Ignore iPhone Users' Basic Rights
Apple Retreating in Chinese Market — A Strategy of Survival, Not Competition

Apple’s strategic maneuver to embed artificial intelligence (AI) features in its iPhones sold in China—by partnering with domestic tech giant Alibaba—has stirred a strong backlash in Washington. The move is seen not just as a business decision but as a geopolitical flashpoint, raising red flags about national security, technological sovereignty, and the growing complexity of U.S.-China tech entanglement. While Apple aims to secure a competitive edge in the world’s largest smartphone market, critics fear that the partnership could empower China’s AI capabilities and weaken Apple’s autonomy in the global tech landscape.

Apple-Alibaba Collaboration Triggers National Security Concerns

According to reports from The New York Times and other foreign media, the U.S. government and Congress have been quietly scrutinizing Apple’s efforts—ongoing for several months—to integrate Alibaba’s AI into iPhones sold in China. This collaboration would allow Apple to offer localized AI functions in compliance with Chinese regulations, but officials in Washington are alarmed. They worry that the deal could accelerate China’s domestic AI progress, widen the functionality of chatbots that operate under state-imposed censorship, and expose Apple more deeply to Beijing’s rigid data-sharing and surveillance laws.

This unease is not without context. Across the U.S. intelligence and defense communities, AI is increasingly viewed as a dual-use technology with significant military implications. No longer limited to automating emails or generating software code, AI is now seen as a tool with potential applications in coordinating drone strikes and other forms of autonomous warfare. In response, the U.S. has been tightening controls to restrict Chinese access to cutting-edge AI systems and advanced semiconductor chips. The Apple-Alibaba deal, therefore, is seen as potentially undermining this strategy.

The political resistance has become vocal. Representative Raja Krishnamoorthi (D-IL), the ranking member of the House Permanent Select Committee on Intelligence, called the partnership misguided, stating, “Alibaba symbolizes the Chinese Communist Party’s strategy of military-civil fusion. I don’t understand why Apple would choose to collaborate with Alibaba in the AI sector.” He added that the deal could facilitate Alibaba’s access to sensitive user data—data it could use to improve its own AI models—and expressed concern that Apple might ignore the fundamental rights of Chinese iPhone users in the process.

From Tech Leader to Tech Enabler? Apple’s China Dependence Under Scrutiny

The controversy comes amid a broader re-evaluation of Apple’s role in China’s technological ascent. What once appeared to be a pragmatic and highly profitable outsourcing model is now being criticized as a long-term strategic liability. Patrick McGee, former Financial Times Apple correspondent, makes this case forcefully in his new book, Apple in China: The Capture of the World’s Greatest Company. He argues that Apple’s deep reliance on Chinese supply chains has created what he calls an “existential vulnerability” for both the company and U.S. innovation at large.

McGee documents how Apple transferred critical manufacturing capabilities and know-how to China—particularly through its major suppliers like Taiwan-based Foxconn. Since the early 2000s, Apple has invested heavily in training and infrastructure in China. By 2008 alone, the company had trained over 28 million workers in the country—more than the total workforce of California. These workers acquired expertise in assembling complex iPhone components, producing touchscreens, and managing high-volume production lines.

The unintended consequence, according to McGee, is that these once-exclusive technologies gradually made their way into the hands of rising Chinese competitors like Huawei, Xiaomi, Vivo, and Oppo. These firms have since closed the technological gap and gained significant market share both domestically and globally. McGee likens this wholesale technology transfer and supply chain development to a geopolitical event on par with the fall of the Berlin Wall, signaling a fundamental shift in global power dynamics.

High-Stakes Gamble in China Amid Mounting Pressure

The Apple-Alibaba partnership is not happening in a vacuum. It follows years of escalating tension between the U.S. and China over technology. In 2022, U.S. officials pressured Apple to scrap a deal with Yangtze Memory Technologies Corporation (YMTC), a Chinese supplier of memory chips, citing national security concerns. Apple eventually backed out. More recently, U.S. tariffs on China-made electronics, including the iPhone, have put Apple’s profit margins at risk—highlighting how trade policy is increasingly reshaping global supply chains.

Despite this political heat, Apple continues to push forward in China, largely because of the market’s sheer size and economic importance. China accounts for nearly one-fifth of Apple’s global revenue. With the next generation of iPhones expected to be heavily AI-driven, Apple believes that rolling out advanced features like AI-powered assistants, personalization, and real-time translation in China will require integration with local partners that comply with Chinese regulations. This is where Alibaba, with its domestic credibility and infrastructure, becomes indispensable.

However, Apple’s position in China is under pressure not just from Washington but also from local competitors. Facing stiff competition from Huawei and Xiaomi, Apple has taken the unusual step of launching a major price-cutting campaign in the Chinese market. According to the South China Morning Post, Apple has slashed iPhone prices by as much as 30%, with models being sold for as little as $346. While the company has not officially announced a markdown, e-commerce platforms and retail outlets across China are advertising discounts of up to USD 176 per device.

The timing of these price cuts coincides with a new Chinese government policy to stimulate domestic consumption. Under the program, smartphones priced below $830 are eligible for a subsidy of up to $70. Apple initially missed the threshold, but after reducing the price of the iPhone 16 Pro 128GB model by $275 to exactly $830, it became eligible for the subsidy. The final price of the device is now lower in mainland China than in Hong Kong—a rare occurrence that underscores Apple’s aggressive pricing strategy to maintain its foothold in a turbulent market.

Despite these efforts, Apple is losing ground. In the first quarter of 2025, its smartphone shipments in China dropped by 9% year-over-year to 9.8 million units—making it the only brand among the top five to register a decline, according to market research firm IDC. In the tablet segment, Apple’s market share fell by two percentage points to 22.5%, while Huawei surged ahead with 34.5%. Xiaomi also saw gains, increasing its share to 16.8%.

Passing on U.S. Factory Construction Costs and Tariffs
Backlash for U.S. Big Tech with High Dependence
Attention on Whether Samsung Electronics Will Benefit

Taiwan’s TSMC, the world’s largest semiconductor foundry, is pushing to raise its supply prices by up to 30%. This move comes as the Trump administration signals the imposition of semiconductor tariffs and TSMC faces rising construction costs for its Arizona plant, prompting the company to pass those costs onto its customers.

TSMC Foundry Prices to Rise Up to 30%

On May 20, Taiwan's Commercial Times reported that TSMC is planning to raise overall foundry prices by around 10%. Notably, chips produced with its 4nm process at its Arizona facility are expected to see a price increase of about 30%. The sharp hike is due to significantly higher construction, labor, and operating costs in the U.S. compared to Taiwan. TSMC aims to recoup a substantial portion of its U.S. plant investment through this price increase.

Nvidia CEO Jensen Huang notably backed TSMC's move. After a meeting with TSMC Chairman Mark Liu, Huang stated, “TSMC’s foundry is worth the value,” and emphasized that all customers, including Nvidia, are subject to uniform pricing, with no preferential treatment for larger clients.

Nvidia plans to produce its next-generation AI chips using TSMC's 2nm process, which naturally comes at a higher cost than previous wafer nodes. The industry believes pricing negotiations between Nvidia and TSMC are largely finalized. Nvidia’s tacit support for the price hike is seen as an effort to secure priority access to TSMC’s production capacity—an increasingly competitive space also targeted by Apple, AMD, Intel, Qualcomm, and MediaTek.

Could Samsung Benefit from TSMC’s Price Hike?

Industry watchers suggest Samsung Electronics may enjoy some spillover benefits from TSMC’s move. Samsung is the only other player besides TSMC capable of mass-producing chips below the 5nm threshold. Customers burdened by TSMC’s price increases may seek alternatives, providing Samsung with new opportunities.

Indeed, Samsung has already secured a deal to produce Nvidia’s “Tegra SoC” for Nintendo’s next-gen “Switch 2” console using its 8nm process. Samsung also aims to begin mass production of its 2nm process by year’s end. Some clients may shift orders to Samsung if the company can offer competitive yields and pricing.

But Limited Mass Production Experience May Hinder Gains

Still, many analysts believe Samsung is unlikely to reap significant benefits from TSMC’s pricing changes. TSMC has regularly raised its prices in recent years—15% in 2022, 17% in 2023, and an expected 25% in 2024—without losing major customers. Samsung currently operates a foundry in Austin, Texas, producing general-purpose chips with 65nm to 14nm processes. It is building another facility in Taylor, Texas, but delays in securing clients have pushed back its launch—first from 2024 to 2026, and now possibly to 2027.

The Taylor plant was originally intended to support 2nm and 4nm production, but plans have reportedly shifted to focus solely on 2nm to improve competitiveness. As a result, clients looking for alternatives to TSMC may find it difficult to switch to Samsung.

Although Samsung has impressively raised its 4nm process yield to 80%, that production line is located in Pyeongtaek, South Korea. With U.S. semiconductor tariffs looming, customers may still favor TSMC for its domestic manufacturing base. This gives TSMC the confidence to push forward with price hikes.

While Samsung's technology rivals TSMC’s, its limited mass-production track record weakens its position. A senior semiconductor industry official noted, “Samsung’s 3nm yield is reportedly between 60% and 70%, comparable to TSMC’s, but the lack of major Big Tech clients reflects lingering doubts about its reliability.”

In the booming AI semiconductor market, performance and yield, not price, are paramount. Many clients prefer TSMC despite rising prices and potential delays because of its superior packaging technology (CoWoS) and extensive mass production experience. Experts suggest that Samsung should promote its unique technologies, such as its GAA (Gate-All-Around) process and 2.5D packaging solution “I-Cube,” to reinforce its reputation for performance and yield. One industry insider summarized, “TSMC effectively monopolizes advanced semiconductor production, making it hard for Samsung to close the market share gap. Instead of focusing on absorbing diverted orders, Samsung should highlight its process strengths and prove it can match TSMC in yield and performance.”

Japan's Growth Rate Reverses Amid Consumer Spending Slump
U.S. Also Posts Negative Growth for the First Time in 12 Quarters
IMF Completely Revises Global Economic Growth Forecast

The global economy is showing signs of a widespread slowdown amid prolonged inflation and uncertainty over tariff policies. In the first quarter, the real GDP of both the U.S. and Japan turned negative, and major European countries as well as China showed weaker-than-expected growth. As key economic indicators from major countries uniformly weaken, the policy responses of governments and central banks are expected to play a crucial role in the future recovery of the global economy.

Japan's GDP Falls at Annualized Rate of 0.7% in Q1

On the 20th of May (local time), Nikkei Asia reported that Japan’s economy contracted by an annualized 0.7% in the first quarter compared to the previous quarter, marking its first negative growth in four quarters. Consumer spending, which makes up more than half of GDP, remained largely flat, with food-related expenditures declining amid continued inflation. Japanese Minister of Economic and Fiscal Policy Ryosei Akazawa expressed concern, stating, “Consumer sentiment is weakening.”

Capital investment—another pillar of domestic demand—increased by 1.4% quarter-over-quarter, driven by spending on software and other digital-related investments. However, outlooks for the future remain pessimistic due to the full impact of former U.S. President Donald Trump’s tariff policies still looming. A Nikkei survey of 10 economists forecast that Japan’s annualized real GDP growth in the second quarter would reach only 0.2%.

Japan’s Q1 performance revealed vulnerabilities in its economy even before the U.S. tariffs were imposed last month. Experts believe the full impact of tariffs will become apparent starting in Q2. Takahide Kiuchi, chief economist at Nomura Research Institute, warned, “The effects of tariffs will begin to surface more clearly between April and June,” adding that “this quarter’s weak growth suggests that Trump’s tariffs could further push Japan into a recession.” UBS economists Masamichi Adachi and Kodo Kurihara also projected, “The second quarter will likely show explicit weakness, and exports could plummet due to the shock of tariffs and uncertainty.”

Economic Indicators Weaken in U.S., Europe, and Beyond

Other major economies are faring similarly. China, grappling with structural issues like a sluggish real estate market, posted 4.9% GDP growth in Q1—below the government’s 5% target. Its April manufacturing PMI also fell below 50, the threshold separating expansion from contraction.

Germany, the economic powerhouse of Europe, is struggling with energy issues due to the Russia-Ukraine war. In Q1, Germany’s economy grew by only 0.8%, recovering from a 0.8% contraction in the previous quarter. Concerns about the future have led households to prioritize saving over consumption. France grew by a modest 0.5%, rebounding from a 0.3% contraction the previous quarter but still displaying fragile signs.

In the U.S., the economy posted negative growth for the first time in 12 quarters during Q1. A spike in imports—caused by businesses rushing to purchase before tariffs took effect—contributed to the GDP decline. Consumer spending rose by 1.8% due to purchases like cars, but this was a sharp slowdown from 4% growth in the previous quarter.

Experts describe the U.S. economy as playing a "bizarre duet": while macroeconomic indicators like employment remain strong, consumer sentiment—the lifeblood of the economy—has been frozen for five consecutive months, reverting to levels last seen during the severe inflation three years ago. Expectations for future inflation are also rising. Consumers now expect prices to surge 7.3% over the next year, the highest figure in 44 years since 1981. This reflects rising prices and growing fears over the declining real value of future income.

IMF Slashes South Korea’s Growth Forecast from 2.0% to 1.0%

Amid declining indicators across developed economies, the International Monetary Fund (IMF) has cut its global economic growth forecast for this year by 0.5 percentage points. This sharp revision reflects the global scale of the trade war triggered by Trump-era reciprocal tariffs. In last month’s World Economic Outlook (WEO), the IMF forecast global growth at 2.8% for this year and 3.0% for next year.

The IMF expects growth in advanced economies to slow to 1.4% this year—down 0.5 points from January—and to 1.5% next year, 0.3 points lower than the previous forecast. For emerging markets, growth is projected at 3.7% this year and 3.9% next year, down 0.5 and 0.4 points respectively from earlier estimates.

By country, the IMF forecasts the U.S. will grow 1.8% this year and 1.7% next year. This marks a downgrade of 0.9 points for this year and 0.4 points for next year from its January forecast of 2.7%. Other revisions include:

- Germany: 0% (down 0.3 points)

- Japan: 0.6% (down 0.5 points)

- UK: 1.1% (down 0.5 points)

- Canada: 1.4% (down 0.6 points)

- India: 6.2% (down 0.3 points)

- Mexico: -0.3% (down 1.7 points)

South Korea’s forecast was also dramatically slashed—from 2.0% in January to 1.0% now—representing the steepest cut among the advanced economies classified by the IMF.

Atlanta Fed President Bostic: “Need to Watch for Another 3–6 Months”
Rate Cut Before September ‘Premature’
Chances of June FOMC Rate Cut Plummet

Amid growing uncertainty over U.S. tariff policies and a recent downgrade of the country’s credit rating, senior Federal Reserve officials are voicing caution regarding the timing of potential interest rate cuts. Despite ongoing pressure from former President Donald Trump to lower rates, the Fed is signaling to markets that it is likely to maintain current rates at least until September.

Fed Officials Cool Expectations for Early Cuts

On the 19th of May (local time), Bloomberg reported that Fed officials have expressed concerns that cutting rates before September may be premature due to lingering economic uncertainty. New York Fed President John Williams said at a conference hosted by the Mortgage Bankers Association (MBA), “We’re not going to get a clear read on the situation in June or July,” adding that the Fed is in a “data-gathering and observation” phase. The next FOMC meetings are scheduled for June, July, and September.

Atlanta Fed President Raphael Bostic echoed a similar sentiment in an interview with Bloomberg TV, indicating no rush to alter rates. He noted that prolonged U.S. trade negotiations could have lingering effects through the summer and that it could take several more months to gauge their true impact on the economy.

Speaking at an earlier event, Bostic stated policymakers might need to “wait 3 to 6 more months” to see how the economy stabilizes. However, he did not rule out the possibility of earlier action if trade negotiations unexpectedly lead to major tariff reductions, saying that could lessen inflation pressures and allow for earlier intervention.

Bostic also expressed concerns about inflation expectations, stating that the inflation aspect of the Fed’s dual mandate (price stability and full employment) was more worrisome due to unstable inflation expectations.

Similarly, Williams said the Trump administration’s tariff policies have added uncertainty, complicating economic forecasts and burdening not only policymakers but also businesses and households. Fed Vice Chair Philip Jefferson also stressed a cautious stance, emphasizing the need to prevent temporary price increases from turning into sustained inflation.

30-Year Treasury Yield Briefly Tops 5%

While April’s inflation data came in below Wall Street’s expectations, risks remain. These concerns have led to bond selloffs, causing yields to spike. On the 19th, the benchmark 10-year Treasury yield surged more than 10 basis points to 4.566%, and the 30-year yield jumped over 12 basis points to reach 5.03% — the highest level since November 2023.

This surge was also influenced by Moody’s recent downgrade of the U.S. credit rating from the top-tier “Aaa” to “Aa1.” Moody’s cited irresponsible fiscal policies by both the administration and Congress and a growing deficit with no signs of improvement.

Max Gokhman, Deputy CIO at Franklin Templeton Investment Solutions, warned that unchecked government spending could drive institutional and foreign investors to gradually withdraw from U.S. Treasuries, pushing yields higher, weakening the dollar, and reducing the attractiveness of U.S. equities.

U.S.-China Tariff Deal Eases Recession Concerns

Markets now see less than a 10% chance of a rate cut at the upcoming June 17–18 FOMC meeting. According to fed funds futures pricing, investors currently expect only two 0.25% rate cuts by the end of the year — a sharp drop from the four cuts expected in April.

This shift in expectations also reflects recent progress in U.S.-China trade talks, with both countries agreeing to significantly reduce tariffs over the next 90 days and continue negotiations. With recession fears easing, there is less urgency for the Fed to lower rates.

Goldman Sachs now estimates a 35% chance of a U.S. recession within the next 12 months, down from 45%. Chief Economist Jan Hatzius noted the reduced risk of high tariffs disrupting production and saw positive signs in future trade policy direction.

Improved outlooks have also led to upgraded GDP forecasts. Goldman Sachs raised its 2024 U.S. GDP growth forecast by 0.5 percentage points to 1.0%. Oxford Economics revised its forecast to 1.3%, and Nationwide’s Chief Economist, Kathy Bostjancic, also now expects 1.0% growth, up 0.5 points from her earlier projection.