Trump’s Tariff War Failed to Attract Investment to the U.S.?
“Ignoring signal gates and attacking the Fed” — Trump’s reckless politics
Credit rating agency Moody’s downgrades U.S. sovereign credit rating

The Trump administration claimed that raising tariff rates would boost foreign investment in the U.S., but it remains uncertain whether the policy actually attracted such investment. As President Trump continues to make risky moves that increase market uncertainty, risks surrounding the U.S., such as the downgrade of its sovereign credit rating, are growing.

Doubts Over Trump’s Tariff Policy Outcomes

On 18th May (local time), the political news outlet Politico reported that while President Trump tried to use tariff policies to encourage foreign companies to invest in the U.S., no clear effect has emerged. Trump had argued that imposing high tariffs on imports would promote “reshoring,” meaning American and foreign companies relocating production facilities back to the U.S. White House spokesperson Cush Desai recently cited a roughly 22% increase in domestic gross investment in Q1 of this year as evidence of the tariff policy’s effectiveness.

However, Politico emphasized that the figures Desai presented were recorded before the tariffs were actually implemented. The White House reportedly included investment plans decided before the tariff war began as “tariff achievements,” exaggerating the policy’s impact. Furthermore, Politico noted that due to the fluctuating nature of tariff policies, companies frequently change or postpone their investment plans, making it very difficult to assess tariffs’ real impact on corporate investment.

Facing the risk that tariff policies are backfiring and pushing the U.S. toward a fiscal crisis, President Trump has instead doubled down on tax cuts rather than raising revenue. Recently, he urged the Republican majority in Congress to pass a “big, beautiful, single bill” consolidating his various economic policies. The bill’s core elements include extending the Tax Cuts and Jobs Act (TCJA), lowering income and corporate taxes, and making tips and similar earnings non-taxable. According to the U.S. public interest group Tax Foundation, if passed, the bill could reduce U.S. government revenue by about USD 4 trillion by 2034.

Trust Erodes Amid Cumulative Missteps

Beyond tariffs and tax cuts, President Trump is making precarious moves that risk further damaging market confidence. A prime example is his failure to immediately dismiss White House National Security Advisor Mike Waltz, who was at the center of a military secrets leak controversy known as “Signal Gate.” Waltz lost trust within the White House after it emerged in March that he discussed sensitive military information, including plans for strikes against Houthi forces, over the private messenger app Signal with diplomatic and security officials. However, Trump delayed Waltz’s dismissal to avoid appearing to yield to outside pressure and only removed him this month.

Excessive pressure on the Federal Reserve (Fed), which independently determines monetary policy, is also problematic. Recently, Trump has repeatedly called on the Fed to cut interest rates, urging economic stimulus in response to inflation and recession concerns caused by his aggressive tariff policies. On April 17, he said, “If I wanted to fire Jerome Powell [Fed Chair], I could do it very quickly,” adding, “I’m not satisfied with him.” On the same day, he posted on social media urging rate cuts, claiming, “Powell should have lowered rates long ago like the European Central Bank (ECB), and it’s not too late now.”

This pressure has continued. On May 14, Trump wrote on social media, “There is no inflation, and prices for gasoline, energy, groceries, and everything else have effectively fallen,” urging the Fed to cut rates “like Europe and China have.” He also questioned, “What’s wrong with ‘Too Late Powell’? Isn’t it unfair to a prospering America?” and added, “Just let everything happen.”

Market insiders criticize Trump’s repeated calls for rate cuts as a “bad move.” One market official explained, “Policymakers generally want to cut rates, but blindly accepting this can worsen inflation and cause other side effects,” stressing, “That is why institutions deciding monetary policy, including the Fed, are granted independence.” The official added, “If the Fed succumbs to political pressure, global investors may lose trust in the dollar’s value, which could reduce investment appetite for U.S. risk assets and accelerate a weak-dollar trend.”

U.S. Credit No Longer ‘Top Tier’

Amid accumulating negative factors since the Trump administration took office, the U.S. sovereign credit rating has noticeably deteriorated. On May 16, Moody’s, one of the world’s top three credit rating agencies, announced it downgraded the U.S. credit rating from the highest level ‘Aaa’ to the next level ‘Aa1.’ This marks the first time since 1917—108 years—that the U.S. rating has fallen below Aaa in Moody’s evaluation. The other two major rating agencies, Standard & Poor’s (S&P) and Fitch, had already downgraded the U.S. rating by one notch in 2011 and 2023, respectively.

Moody’s cited the rapidly increasing national debt as the reason for the downgrade. The U.S. government’s debt ratio and interest payment ratio have risen sharply over the past decade to levels much higher than countries with similar ratings. As of May this year, the U.S. national debt approached approximately USD 36.22 trillion, a USD 1.66 trillion increase from the previous year. Last year, the U.S. government spent USD 1.133 trillion on interest payments on national debt, surpassing USD 1 trillion for the first time in history.

Additionally, Moody’s warned that the current fiscal reform plans under review by the Trump administration are unlikely to reduce mandatory spending and fiscal deficits in the coming years. Thus, the tariff war and tax cut policies under Trump were judged as not significantly helping to resolve fiscal deficits. In response, the U.S. White House openly expressed dissatisfaction, stating, “Moody’s, which was quiet during the four years under former President Joe Biden, has made a biased decision.”

TSMC races ahead of competitors in foundry
‘Super supplier’ ASML yields a step before TSMC
“If Taiwan is invaded, TSMC and ASML are the big concern” — their influence is overwhelming

The global semiconductor market is being reshaped around Taiwan’s foundry company TSMC and the Netherlands’ semiconductor equipment maker ASML. With overwhelming market influence, these two companies dominate their respective sectors and increasingly affect national security.

TSMC’s Market Dominance

According to semiconductor industry sources on the 19th, the global semiconductor market shows intensified monopoly trends centered on TSMC and ASML. These two companies, wielding massive influence in the foundry and semiconductor equipment sectors, respectively, have established themselves as the “central pillars” of the supply chain.

TSMC holds a 61% share of the global foundry market and demonstrates overwhelming competitiveness especially in advanced 2-nanometer (nm) process technology. It is understood that TSMC has already secured major global clients for its 2nm process, including Nvidia, Qualcomm, Apple, AMD, Broadcom, and MediaTek. Mass production of TSMC’s 2nm semiconductor wafers is expected to begin in earnest in the second half of this year.

TSMC’s competitors, Samsung Electronics and Intel, have yet to stand out in advanced process technology. Samsung entered the 2nm competition using gate-all-around (GAA) transistor technology but still faces unstable yield rates and has not secured enough external customers. Recent reports indicate Samsung’s 2nm pilot production yield is between 30-50%, which is considerably lower than TSMC’s stable yield above 60%.

Intel has outlined a roadmap targeting 18A and 1.4nm nodes and plans to increase its capital expenditure to USD 12–14 billion in 2025, accelerating the rebuilding of its foundry business. However, Intel’s advanced manufacturing process maturity, yield, and cost efficiency are still several years behind TSMC.

ASML Bows to TSMC

ASML, which leads the cutting-edge semiconductor market alongside TSMC, is the sole supplier of extreme ultraviolet (EUV) lithography equipment essential for processes below 7nm. It holds a monopoly with over 90% market share. Major foundry companies like TSMC, Intel, and Samsung must rely entirely on ASML’s equipment for advanced semiconductor production. This is why ASML was once called the “super subordinate” (‘super Eul’) in the semiconductor industry.

Notably, the power dynamic between ASML and TSMC reversed during the introduction of ASML’s High-NA EUV equipment. Commercialized in early last year, High-NA EUV is high-spec equipment specialized for sub-2nm semiconductor production. Initially, TSMC was reluctant to rush the adoption of High-NA EUV, but the atmosphere changed after TSMC Chairman Wei Zhejia visited Europe in June last year and held talks with ASML.

At that time, foreign media, including Taiwan’s Digitimes, reported that TSMC negotiated favorable conditions for semiconductor equipment supply and pricing with ASML. ASML actively lowered prices and pushed sales. An industry insider explained, “At present, TSMC is the only foundry company with the capacity to purchase High-NA EUV equipment continuously. Since demand is limited, the supplier ASML has no choice but to lower its stance.” Subsequently, in September 2024, TSMC purchased ASML’s first High-NA EUV equipment, the ‘EXE:5000.’

TSMC Emerges as a Key to Taiwan’s Security

Maintaining this cooperative relationship and market dominance, the two companies influence not only the semiconductor industry but also national security. According to a Bloomberg report in May last year, U.S. government officials unofficially expressed concerns to the Netherlands and Taiwan about “what might happen if China invades and occupies Taiwan, which produces about 90% of the world’s advanced semiconductors.” If China takes control of Taiwan’s semiconductor industry, particularly TSMC’s production facilities, world-class advanced semiconductor manufacturing capabilities could fall into Chinese hands.

In response, ASML conveyed that it could remotely disable the EUV equipment it supplied to TSMC in the event of a Chinese invasion of Taiwan. This demonstrated confidence that TSMC’s semiconductor manufacturing technology would not be leaked even if geopolitical risks arise. In a CNN interview in September 2023, then-TSMC Chairman Mark Liu stated, “No one can control TSMC by force,” adding, “Even if military aggression occurs and TSMC factories are seized, they will be unable to operate.”

Stock Prices Plunge Amid Nightmare of U.S. Tariffs
Significant Profit Decline Expected This Year
Efforts to Minimize Impact Through Expanded Local Production

While the U.S. recently struck a truce with China to ease trade tensions, Japan finds itself in a markedly different situation. American tariffs on automobiles—unchanged despite other concessions—are hitting Japanese automakers hard. As their pleas for exemption go unanswered, companies are entering “survival mode,” confronting steep losses, weakened investor confidence, and the urgent need to restructure. The disparity in treatment between Japan and its global peers underscores deepening economic friction and the complex politics of trade under the Trump administration.

Mounting Tariff Pressure Pushes Japanese Automakers to the Brink

Japan’s automobile sector—long a linchpin of its export economy—is under siege. Unlike Chinese and British vehicles, which recently benefited from lowered U.S. tariffs, Japanese exports continue to face the possibility of a punishing 25% duty under rules tied to the United States-Mexico-Canada Agreement (USMCA). Compounding the problem is the strength of the yen, which erodes the price competitiveness of Japanese goods abroad.

President Trump’s continued criticism of Japan’s auto trade surplus with the U.S. only deepens the uncertainty. He argues that American vehicles fail to gain traction in Japan, while Japanese brands dominate U.S. roads—a sentiment that has found political resonance. This climate leaves Japanese companies with little room to maneuver.

Despite Japan’s calls for equal treatment, Washington remains unmoved. Tokyo's request to exclude Japanese cars from the tariff list—particularly given its alliance with the U.S.—has been met with silence. As one Japanese official pointed out, the issue isn’t just economic—it’s symbolic of a deteriorating trust between allies over fair trade treatment.

Declining Profits and Mass Layoffs Signal Industry Crisis

The economic toll is becoming clearer by the day. Auto stocks across Japan are in decline, with manufacturers now trading well below their book value. According to data from QUICK, Toyota is valued at just 0.96 times its book value, while Nissan and Mazda are at historic lows of 0.25 and 0.3, respectively.

The downward trend follows Trump’s re-election, which the markets interpret as a sign that aggressive tariff policies will persist. Mazda's stock dropped 19%, Nissan's fell 11%, and Mitsubishi's declined 7%. Even giants like Toyota and Honda weren’t spared, with losses of 2% and 1%, respectively.

Financial forecasts reflect this grim reality. Toyota has slashed its operating profit outlook for fiscal year 2025 by 20.8%, down to $26.16 billion. It attributes a $1.238 billion loss in just April and May to U.S. tariff exposure. Honda is even more pessimistic, projecting a 70% decline in net profit to $1.72 billion.

The workforce is also bearing the brunt. Nissan has unveiled a sweeping restructuring plan that includes 20,000 job cuts, adding to 9,000 announced last year. The company also aims to reduce its global manufacturing footprint by cutting its number of plants from 17 to 10 by 2027.

Reimport Strategy Signals Desperation—and Tactical Creativity

Amid the deadlock, Japan is turning to unconventional tactics. The government is considering reimporting Japanese-brand vehicles manufactured in U.S. plants. These would be sold domestically—not because they meet consumer demand better, but as a symbolic gesture aimed at reducing the U.S. trade deficit. The logic is political: if American cars don’t sell in Japan, perhaps Japanese cars made in America can.

This isn't without precedent. During the trade tensions of the 1990s, Japan used a similar approach. Some reimported U.S.-made models found moderate success in the domestic market. Today, officials hope history might repeat itself—at least enough to soften American criticism.

Still, the strategy reflects deeper structural challenges. Japanese demand for U.S. car brands like GM, Ford, and Stellantis remains low, and the lack of aggressive marketing from these companies doesn't help. As one official told The Economy, the goal isn’t market transformation but optics and negotiation leverage.

Trade discussions are ongoing, with a third round of bilateral talks on the horizon. Japan is preparing a working-level meeting to propose reforms such as relaxing U.S. safety regulations, expanding agricultural imports, and eliminating non-tariff barriers. If progress is made, Economic Revitalization Minister Ryosei Akazawa is expected to travel to Washington as early as May 22 to meet with Treasury Secretary Scott Bessent and escalate negotiations to the ministerial level.

But with the U.S. maintaining that auto tariffs are “non-negotiable,” Japan’s hopes remain fragile. For now, its automakers are bracing for a long, uncertain road ahead.

"Small but Powerful 'Magpie Drone' Conducts Reconnaissance Missions in Flocks"
"'Seagull,' 'Hawk,' and 'Eagle' Drones Equipped with Precision Strike Capabilities"
"Chinese Government Unveils New Underwater Drone, Escalating Unmanned Submarine Competition"

In a bold demonstration of its rapidly advancing unmanned military technology, China unveiled a new generation of bird-mimicking stealth drones, known as ornithopters, at the 10th China Military Intelligent Technology Expo (CMITE 2025) in Beijing. Designed to look and behave like real birds, these drones are capable of bypassing radar detection systems and carrying out covert operations in both urban and battlefield environments. The event drew intense interest from global military experts and defense analysts, marking what many consider a significant shift in future warfare strategy—not just in the skies, but beneath the oceans as well.

A Swarm of Imitation: Nature-Inspired Drones Built for War

The ornithopters displayed by China spanned an impressive range of sizes and functionalities, underscoring their versatile application across reconnaissance, infiltration, and direct combat missions. What distinguishes these drones from conventional unmanned aerial vehicles (UAVs) is their mechanical mimicry of real bird wing-flapping, enhancing their stealth and allowing them to blend into civilian airspace or natural environments undetected.

At the smallest end of the spectrum is the “Magpie Drone,” a featherweight UAV that weighs just 90 grams—light enough to be thrown by hand. Outfitted with a miniature high-resolution camera, it is optimized for real-time urban surveillance and forward-position reconnaissance. Chinese defense officials noted that these drones can be deployed in flocks, overwhelming enemy monitoring systems and maintaining a persistent aerial presence. Their collective flight patterns are not only harder to detect but also more difficult to interpret, which makes them ideal for disrupting enemy radar and ensuring continuous situational awareness.

Larger variants take the form of seagulls and eagles, capable of carrying heavier payloads and sustaining longer flight durations. The Eagle Drone, weighing around 3.6 kilograms with a 2-meter wingspan, can operate within a 6–8 kilometer range and remain airborne for up to 40 minutes. These mid-sized drones are not mere observers—they can be armed with precision-guided micro-weapons, turning them into light strike platforms capable of conducting surprise attacks in high-risk zones.

Another standout was the vertically launching “Hummingbird” coaxial drone, which astonished observers with its compact firepower. This drone has a standard weight of 10 kilograms and supports payloads up to 3 kilograms, including 60mm and 82mm mortar shells. Its modular design allows for rapid deployment and portability, making it well-suited for swarm tactics. These drones could equip small units with potent firepower even without the support of conventional air forces, changing how tactical operations are conducted in remote or contested areas.

Designed for Deception: Engineering for Efficiency and Stealth

All of these ornithopter drones share critical engineering advantages. Constructed from lightweight and resilient rubber materials, they are reusable, easy to maintain, and cost-effective. Most remarkably, each model can be custom-designed to mimic local bird species, ensuring perfect environmental camouflage. This makes them highly effective for covert surveillance, psychological operations, and intelligence gathering in areas where conventional drones would be easily spotted or destroyed.

The foundation for this breakthrough was laid at Northwestern Polytechnical University in Xi’an, where researchers have been developing ornithopter technology for years. In October 2023, the university’s team achieved a record-breaking flight with their “Xinge” drone (信鸽, meaning “Carrier Pigeon”), which remained aloft for 3 hours, 5 minutes, and 30 seconds on a single battery charge. The previous record had been held by another model from the same lab—the “Yunxiao” drone (云鸮, or “Owl”)—which managed a flight time of 2 hours, 34 minutes, and 38 seconds.

What’s astonishing is the scale and efficiency of the newer model. The Xinge drone has a 70 cm wingspan and weighs only 260 grams, making it over 50% smaller in wingspan and a quarter the weight of the Yunxiao. Despite this reduction, its flight capability significantly increased, thanks to an innovative “cone crank” mechanism that allows its wings to expand and retract just like a real bird’s. According to CCTV, this allows the Xinge to mimic avian movement with such fidelity that it achieves unmatched aerodynamic efficiency, placing it far ahead of other drones in its class.

Taking the Fight Underwater: China's 11.5-Meter Submersible Drone

China’s strategic ambitions are not limited to the skies. According to Naval News, the country has also made remarkable progress in underwater drone technology, recently developing a new extra-large unmanned underwater vehicle (XLUUV). Spotted for the first time while being transported through a Chinese city, the drone appears to belong to a class of submarines capable of carrying lethal payloads, including torpedoes, naval mines, and missile systems.

This unmanned submersible is approximately 11.5 meters long and 1.6 meters wide, placing it in the same category as the UK’s CETUS program and Canada’s Solus XR, both under development for next-generation naval operations. Sources indicate that it is part of China’s UUV-300 series, with different versions manufactured for both export markets and the People’s Liberation Army (PLA).

One specific variant, the UUV300CB developed by Poly Technologies, can dive to depths of 300 meters and travel up to 450 nautical miles (around 833 km) at a cruising speed of 5 knots. It can reach a top speed of 12 knots (approx. 22 km/h) and is equipped with a suite of advanced communication systems, including satellite uplinks, UHF, and acoustic transmitters. Designed with low-noise capabilities, it excels in stealth maritime operations, making it a formidable tool for long-range underwater missions.

The launch of this new model has been widely interpreted as a clear signal of China’s commitment to enhancing its undersea warfare capabilities. As Naval News emphasized, China is now accelerating its development of armed, autonomous, extra-large submarines, a move that could dramatically alter the balance of naval power in Asia and beyond. Analysts note that with their ability to evade detection and strike targets from a distance, unmanned underwater drones are fast becoming a cornerstone of 21st-century naval strategy.

Moody’s Downgrades U.S. Sovereign Credit Rating to Aa1
All Three Major Credit Rating Agencies Strip U.S. of Top Rating
Will a Massive Selloff of U.S. Treasuries Follow?

For decades, the United States has served as the anchor of global credit stability—its triple-A sovereign credit rating a symbol of unparalleled trust in its economic might and political institutions. But in a move loaded with historical and financial significance, Moody’s Investors Service has stripped the U.S. of its final ‘AAA’ rating, marking the end of an era. With this decision, all three major international credit rating agencies—Moody’s, Standard & Poor’s (S&P), and Fitch—have now downgraded the U.S. The consequences are poised to reverberate across markets, policy debates, and the fiscal direction of the Trump administration.

U.S. Sovereign Credit Rating Downgraded Again

In a press release issued on November 16, Moody’s downgraded the United States’ long-term sovereign credit rating from the highest possible level, Aaa, to Aa1, citing “large and growing fiscal deficits” and rising interest costs. This is the first time since 1917 that the U.S. has fallen below Aaa in Moody’s assessment—a gap of 108 years.

Moody’s pointed specifically to the rapid expansion of federal debt and rising interest payments as central reasons behind the downgrade. Over the last decade, the U.S. has accumulated debt at a pace far surpassing similarly rated countries. As of May 2025, total U.S. national debt reached $36.22 trillion, a surge of approximately $1.66 trillion from the same period the year before.

Even more alarming is the cost of servicing that debt. In 2023, the U.S. government spent over $1.13 trillion just on interest payments, crossing the trillion-dollar mark for the first time in history. The interest burden is becoming one of the largest categories of federal spending, threatening to crowd out critical investments in defense, infrastructure, and social programs.

Looking ahead, the fiscal picture appears increasingly bleak. Moody’s projects that debt accumulation will accelerate, driven by persistent budget deficits and rising interest rates. The agency noted that none of the current budget proposals being debated in Congress appear sufficient to correct the structural fiscal imbalance.

Instead of implementing tax reforms or revenue-enhancing policies to address the widening deficit, the Trump administration has doubled down on pushing for further tax cuts. President Trump recently called on Republicans to pass a new legislative package that would extend the 2017 Tax Cuts and Jobs Act—a flagship policy of his first term—and add additional reductions. Critics argue that this move could further erode the government’s revenue base at a time when fiscal discipline is urgently needed.

S&P and Fitch Also Say “U.S. Sovereign Debt Is on Shaky Ground”

Moody’s is not alone in its pessimism. The other two titans of credit analysis—Standard & Poor’s (S&P) and Fitch Ratings—have already pulled the plug on America’s AAA status.

S&P was the first to make such a move back in August 2011, when it downgraded the U.S. from AAA to AA+ during a fierce political battle over the debt ceiling. The downgrade, driven by what S&P called “political brinkmanship” in Congress, sent shockwaves through global markets and was a warning about growing dysfunction in Washington’s fiscal governance.

More recently, on August 1, 2023, Fitch followed suit, also slashing the U.S. rating from AAA to AA+. In its official statement, Fitch expressed concerns over the deteriorating fiscal outlook, the anticipated rise in debt-to-GDP ratio over the next three years, and a decline in what it described as "governance." This term refers to a country’s institutional capacity to manage public finances effectively and maintain political and administrative stability.

Crucially, Fitch explicitly cited the January 6, 2021, Capitol riot as part of its rationale. Richard Francis, co-head of Fitch’s sovereign ratings division, said in an interview that the storming of the Capitol by Trump supporters—angry over the 2020 election results—was partially factored into the downgrade. The violent event, which disrupted the certification of the election results and resulted in multiple deaths, underscored deep institutional vulnerabilities in the American political system. Former President Trump has since been indicted for his role in inciting the attack.

This broader political instability, combined with weak fiscal planning, paints a troubling picture for the United States’ financial reputation on the global stage.

Experts Warn of Market Fallout

The complete loss of the U.S.’s top-tier credit rating status has triggered widespread concern among market observers and economic analysts. A country’s credit rating serves as a barometer of its creditworthiness, affecting everything from the cost of government borrowing to the interest rates on home loans and business financing. When a sovereign rating drops, bond yields typically rise, leading to higher borrowing costs for both the government and ordinary consumers.

One of the most immediate concerns is the potential for a massive selloff in U.S. Treasury bonds. Andrew Brenner, head of international fixed income at NatAlliance Securities, warned of an impending attack by what he referred to as “bond vigilantes”—market participants who sell off government bonds in protest against fiscal mismanagement or inflationary policies. This phenomenon often forces governments to raise interest rates even further to maintain investor confidence.

Others believe that the downgrade could trigger a broader flight from U.S. financial assets. Max Gokhman, chief investment officer at Franklin Templeton, remarked that institutional investors are already shifting away from U.S. Treasuries in favor of other safe-haven assets. As a result, the cost of debt servicing will continue to climb, leading to a decline in long-term Treasury prices, mounting pressure on the U.S. dollar, and reduced investor appetite for American equities.

Yet, not all analysts foresee a financial crisis on the scale of 2011. Some argue that the risks posed by America’s fiscal imbalances are already well understood and have been priced into markets. The Wall Street Journal reported that few market participants expect Moody’s downgrade to spark the kind of turmoil seen after S&P’s 2011 action. Similarly, British investment bank Barclays emphasized that a one-notch downgrade is not significant enough to alter regulatory frameworks regarding the collateral value or risk weighting of U.S. Treasuries—meaning that financial institutions are unlikely to shift away from U.S. debt instruments in a meaningful way.

Still, the symbolism of the downgrade is powerful. It signals that confidence in the U.S. government’s ability to manage its finances is slipping, even among the most trusted credit watchdogs in the world. Whether the market reaction is limited or long-lasting, the underlying issues—rising debt, political dysfunction, and weakened governance—remain a growing source of concern both domestically and abroad.

YMTC Projected to Produce 1.51 Million NAND Flash Wafers This Year
Rapid Technological Leap Led by 'Hybrid Bonding'
Samsung and SK Hynix Risk Losing Competitive Edge in China

As global semiconductor giants retrench in the face of market volatility, Yangtze Memory Technologies Co. (YMTC) is breaking away from the pack. China’s flagship NAND flash manufacturer is not only defying the industry’s production slowdown but also staking out bold new ground in memory technology. With robust government backing, cutting-edge innovation, and a rapidly growing foothold in the world’s largest NAND market—its own domestic base—YMTC is reshaping both commercial dynamics and geopolitical equations in the memory chip industry.

What makes this development even more striking is how YMTC’s rise is occurring just as its competitors pull back. The company is simultaneously expanding output, advancing in complex semiconductor processes like hybrid bonding, and introducing world-leading SSDs. In a market where caution rules, YMTC is accelerating—and the aftershocks are being felt globally.

Defying a Global Downturn With Bold Expansion

The NAND flash market has been facing a prolonged downturn, with average selling prices (ASPs) falling sharply due to excess inventory and soft demand. In response, most major players—including Samsung Electronics, SK Hynix, Micron, and Kioxia—have implemented significant production cuts to mitigate losses and stabilize prices. For instance:

- Micron has reduced its NAND flash wafer input by approximately 10% since late 2024.

- Samsung Electronics is projected to cut production by 6%, from 5.07 million wafers to 4.75 million.

- SK Hynix is expected to trim its output by 5%, from 2.1 million to 1.98 million wafers.

- Even Kioxia (in conjunction with Western Digital) has joined this wave of austerity.

Amid this conservative wave, YMTC is moving against the current. According to research firm Omdia, the company’s NAND flash production is forecast to jump from 1.21 million wafers in 2024 to 1.51 million in 2025—a record high for YMTC and a volume that overtakes Micron’s projected 1.3 million wafers, solidifying its position among the world’s top memory producers.

This sharp contrast signals more than a business gamble—it reflects a strategic ambition backed by national policy. Where others see risk, YMTC sees opportunity, emboldened by China’s push for technological independence in semiconductors.

Harnessing Innovation: Hybrid Bonding and 294-Layer SSDs

YMTC’s bold production push is underpinned by its rapidly advancing technological capabilities, particularly in hybrid bonding—a highly sophisticated chip packaging method increasingly seen as a cornerstone of future memory technology.

Unlike traditional techniques that rely on metallic bumps to link wafer layers, hybrid bonding directly connects wafers at the molecular level, enabling thinner chip structures, faster data transmission, and higher memory densities. Mastering this technique is no small feat, and YMTC’s progress here has drawn industry-wide attention.

So much so that in February, Samsung Electronics reportedly entered into a licensing agreement with YMTC over hybrid bonding technology. Analysts believe the move was designed to prevent potential patent disputes, a wise precaution given YMTC’s recent legal history. In fact, the Chinese firm previously filed a patent infringement lawsuit against Micron in a U.S. court over its NAND flash designs. A Korean industry insider noted, “Samsung likely acted early to avoid entangling itself in similar disputes.”

YMTC is also making waves in commercial product development. Its subsidiary Cheetah (치타이) recently launched the TiPro9000 SSD in the Chinese market, featuring a groundbreaking 294-layer memory structure—the first product to use YMTC’s Xtacking 4.0 architecture. This technology separates the memory array into two high-density stacks (150 and 144 layers), then fuses them using hybrid bonding.

The result is a major leap in bit density, greater efficiency in chip fabrication, and a product that positions YMTC at the forefront of next-generation NAND innovation. For a company once perceived as a second-tier player, this evolution marks its arrival on the global stage.

Home-Turf Advantage: Market Disruption in China and Global Repercussions

Perhaps the most consequential arena where YMTC is poised to dominate is its domestic market, which accounts for nearly 50% of global NAND flash consumption. Unlike its foreign competitors, YMTC benefits from strong Chinese government incentives that prioritize the use of locally produced chips.

Subsidies, procurement preferences, and favorable regulatory conditions are all part of Beijing’s strategy to increase semiconductor self-sufficiency. As one market analyst explained, “Just as CXMT is steadily increasing its share in the DRAM market, YMTC is expected to do the same in NAND flash.”

This trend spells trouble for South Korean giants Samsung and SK Hynix, both of whom have significant operations in China:

Samsung manufactures 40% of its NAND output in Xi’an, with much of it supplied to Chinese clients.

SK Hynix produces 20% of its NAND volume at its Dalian plant, also primarily for local customers.

As YMTC strengthens its grip on the Chinese market, these Korean companies risk losing both market share and client access.

The potential financial hit is not trivial. In the first three quarters of 2024:

- Samsung Electronics earned USD 35.31 billion from exports to China, about 30% of its total revenue—nearly matching its 29% from the Americas.

- SK Hynix derived USD 9.11 billion from China, representing 26% of its revenue, second only to its U.S. exposure USD 11.40 billion, or 34% of its revenue.

Given this deep commercial reliance on China, any market shift toward YMTC will likely impact the bottom lines of both companies. Analysts view this not as a short-term blip but a structural transformation that will continue to unfold as YMTC matures.

YMTC’s rise is a multi-pronged surge: higher production amid an industry contraction, rapid innovation in hybrid bonding, and a strategic foothold in the largest consumer market for NAND flash. Driven by national policy, backed by legal assertiveness, and armed with cutting-edge products, YMTC is no longer a peripheral competitor—it is now a formidable force in the global semiconductor race.

As geopolitical tensions escalate and global supply chains realign, the ascendancy of YMTC could mark the beginning of a new chapter in semiconductor history—one where China is no longer just a factory, but a global technology leader.

Sluggish Downstream Demand Triggers Earnings Shock for Automotive Chip Giants
As Traditional Leaders Falter, Chinese Automotive Semiconductors Surge Ahead
Chinese Cars Embrace Domestic Chips, Accelerating Toward Semiconductor Self-Sufficiency

The automotive semiconductor market, once defined by a few dominant Western and Japanese players, is entering a dramatic phase of transformation. As global leaders struggle with declining profits and market share, Chinese semiconductor companies are racing ahead—backed by strong government support, strategic investments, and a booming domestic electric vehicle (EV) industry. What was once a gap in technological capability is now narrowing at unprecedented speed.

This surge comes at a pivotal time. Downstream demand has weakened across the globe, triggering stagnation among legacy chipmakers. But for China, this downturn has become an opening. Aided by targeted industrial policies and aggressive localization efforts, Chinese firms are not only climbing the global rankings but also challenging the long-standing hierarchy in one of the most critical sectors powering the future of mobility. The question now is no longer if Chinese chipmakers will reshape the global market—but when.

China Gains Ground in Power Semiconductor Market

The cracks in the dominance of legacy players are becoming more visible. In its Q2 FY2025 earnings call covering the January–March period, Infineon Technologies, the world’s top automotive semiconductor supplier, revealed that its grip on the power semiconductor market is weakening. These chips—critical for energy efficiency in electric vehicles and home electronics—have long been a linchpin of Infineon’s success. But in 2024, the company’s global market share slipped to 17.7%, a steep 2.9 percentage point drop from the previous year.

The story is similar for Onsemi and STMicroelectronics, the second- and third-ranked players, whose shares fell to 8.7% and 7%, respectively. Declining operating profits tell a deeper story of contraction: Infineon's Q1 operating profit plunged 36% year-over-year to €318 million, forcing the company to revise its 2025 outlook downward and reduce investments. Onsemi posted a staggering $573 million operating loss, while STMicro’s earnings plummeted to just $3 million, down nearly 100% from the year before.

While these global giants grapple with slowing growth, Chinese firms are charging ahead. Hangzhou Silan Microelectronics, a relatively lesser-known IDM, now holds a 3.3% share of the global power semiconductor market, securing sixth place worldwide. Even more symbolic is the rise of BYD, a Chinese EV giant that captured a 3.1% share—its first time breaking into the top 10 globally. Once reliant on imported chips, BYD is now a formidable force in chip manufacturing.

This reshuffling of rankings signals more than temporary shifts—it hints at a systemic reordering of global semiconductor leadership, with China rapidly ascending the value chain.

Beijing’s Push for Semiconductor Self-Sufficiency

China’s rise in the automotive chip market is no accident—it’s the product of a coordinated national strategy. Despite a domestic market valued at $16.47 billion USD in 2024 and expected to exceed $42.3 billion by 2030, China’s self-sufficiency rate in automotive semiconductors remains below 15%. Even more concerning is that for complex, high-performance chips such as System-on-Chips (SoCs) and Microcontroller Units (MCUs), the localization rate is still under 5%.

To close this gap, the Chinese government has set a clear target: achieve 25% localization in automotive semiconductor sourcing by the end of 2025. In pursuit of this goal, Beijing has become the world’s largest purchaser of semiconductor manufacturing equipment, while actively pressuring domestic firms to transition to homegrown chips.

The policy measures are bold and direct. Companies are required to report their quarterly procurement data, particularly the extent of their reliance on locally produced chips. This ensures accountability and alignment with national priorities. In tandem, generous government subsidies are accelerating R&D and production capabilities across the board.

Evidence of progress is already visible. According to a study by UBS, all the power semiconductors used in BYD’s high-end Seal EV model are now entirely sourced from Chinese suppliers. In the autonomous driving sector, Horizon Robotics—a key player in smart vehicle chips—increased its clientele from 14 to 25 companies within just three years.

These advances are a testament to China’s ability to execute large-scale industrial transformation, turning policy vision into production reality at remarkable speed.

Chinese Carmakers Take Chipmaking into Their Own Hands

Perhaps the most transformative development is the strategic shift by Chinese carmakers toward in-house semiconductor development. These firms are no longer content to depend on third-party suppliers—foreign or domestic—for critical components. They are becoming chipmakers themselves.

Take BYD: just two years ago, it sourced its power semiconductors from international firms. Today, it operates its own chip fabrication plants dedicated to electric vehicles. Similarly, Geely, one of China’s largest automakers, began developing its own semiconductors as early as 2018. EV upstarts like NIO, Xpeng, and Li Auto have also joined the self-reliance push, committing resources to internal chip R&D.

While reducing costs and gaining tighter control over supply chains were initial motivators, the evolution of automotive technology has added urgency. With AI-driven smart cars on the rise, general-purpose chips no longer suffice. Vehicles now require chips that can handle real-time data processing, image recognition, and complex decision-making—functions that demand highly specialized, application-specific chips.

The performance gap is becoming more apparent. Generic chips may compromise speed, energy efficiency, and safety, whereas custom-designed automotive chips offer superior responsiveness and optimization. This matters not just for performance, but for survival in the race toward fully autonomous vehicles.

In China, a new maxim is gaining ground: “Whoever controls semiconductors will control the future of the automobile.” This belief is driving a strategic transformation, not only in production but in ideology. For Chinese automakers, semiconductors are no longer just a component—they are a competitive frontier, and conquering it is key to future leadership in the global mobility market.