Fed Keeps Rates at 4.25–4.50% in June FOMC Meeting
Despite Pressure from Trump, Fed Opts for a Hold
Was the Decision Driven by Inflation Fears Linked to Tariffs?

In a turbulent economic landscape marked by trade tension, inflationary pressure, and political showdowns, the U.S. Federal Reserve is standing firm. Despite repeated calls and escalating rhetoric from President Donald Trump demanding immediate interest rate cuts, the Fed has once again refused to budge. By freezing the benchmark interest rate for the third consecutive time, the central bank is signaling that political pressure will not dictate its monetary policy. Instead, it remains focused on navigating the fragile balance between inflation control and economic growth.

Caution Over Compliance: The Fed Holds Its Ground

On May 7, the Federal Reserve’s Federal Open Market Committee (FOMC) met and unanimously decided to keep the benchmark interest rate at 4.25% to 4.50%. This marked the third straight pause in rate changes, reinforcing the Fed’s deliberate, cautious stance. The decision, backed by all voting members including Chair Jerome Powell, reflects deep concerns over ongoing economic uncertainties.

During the post-meeting press conference, Powell acknowledged the complexity of the current situation, noting that the Fed is finding it difficult to determine whether inflation or an economic slowdown poses the greater threat. With that uncertainty in mind, the central bank found it inappropriate to take immediate action. Powell emphasized that there is no compelling reason to rush a rate cut and that patience remains the most suitable approach under the current circumstances.

The Fed’s official policy statement also reflected heightened caution. It noted that uncertainty surrounding the economic outlook had further intensified, with increasing risks related to both unemployment and inflation. In reaffirming its stance, the Fed made clear that it prefers to wait until the full impact of current tariff policies becomes clearer before adjusting monetary policy further.

Analysts from The New York Times echoed this interpretation, highlighting growing concern within the Fed over the broader effects of President Trump’s economic decisions. Among these are large-scale spending cuts and immigration policies that could significantly disrupt labor markets and consumer demand. However, despite these concerns, the Fed finds itself constrained. The residual inflationary effects of the pandemic, combined with Trump’s tariff hikes, mean that lowering interest rates could inadvertently re-fuel inflation—something the central bank is keen to avoid.

Trump’s Offensive: Rate-Cut Demands and Personal Attacks

President Trump has not been subtle in his attempts to pressure the Fed into lowering rates. In recent months, he has taken to social media repeatedly to criticize the central bank’s pace and to frame inflation as a non-issue. He claimed that with oil and food prices falling, and inflation virtually nonexistent, the Fed should be cutting rates. This messaging has become a central component of his economic narrative, aimed at portraying the Fed as out of touch with current realities.

But Trump’s criticisms have gone well beyond policy suggestions. He launched personal attacks against Powell, questioning his leadership and even suggesting that he could be swiftly removed if desired. Trump expressed dissatisfaction with Powell’s performance and insisted that he should have acted much earlier to lower rates, pointing to the European Central Bank as an example of timely decision-making. According to the president, even now is not too late to reverse course.

Later in April, Trump escalated his criticism by labeling Powell “Mr. Too Late” and accusing him of being a major failure. He argued that unless the Fed acted immediately, the U.S. economy could slow down further. These comments made clear that Trump views the Fed’s independence as a barrier to his broader economic agenda, particularly as he seeks monetary tools to offset the adverse effects of his own trade policies.

While such rhetoric would have rattled previous administrations or even some market participants, the Fed has thus far remained composed. It continues to emphasize its reliance on data and macroeconomic analysis over political noise, choosing to maintain its credibility and independence in the face of direct confrontation.

Inflation Worries and Long-Term Market Expectations

Behind the Fed’s resistance to rate cuts lies a significant and data-backed concern: inflation remains stubbornly high. While the president insists that inflation is under control, official data tells another story. In March 2025, the U.S. Bureau of Economic Analysis reported that the core Personal Consumption Expenditures (PCE) price index had risen 2.6% year-over-year—surpassing the Fed’s 2.0% target. The core PCE, which excludes volatile food and energy prices, is considered the most reliable gauge of long-term inflation trends.

Powell highlighted this issue in his post-meeting remarks, warning that continued tariff hikes—recently introduced or expanded under Trump’s trade strategy—would likely increase inflation, slow growth, and raise unemployment. This triple threat reinforces the Fed’s cautious approach, as premature monetary easing could worsen all three outcomes.

Financial institutions are now aligning their forecasts with the Fed’s outlook. Goldman Sachs recently adjusted its inflation prediction, projecting that the core PCE rate could rise to 3.8% by the end of 2025, up from the previous estimate of 3.5%. Economists Ronnie Walker and Elsie Peng from the bank attributed the expected rise to a combination of a weakening U.S. dollar and the inflationary impact of tariffs. They also observed that high duties on Chinese imports are pushing U.S. importers to shift their demand toward lower-tariff countries, introducing new long-term structural changes that could keep inflation elevated.

All of this adds up to a difficult position for the Fed. While it is under intense pressure to stimulate growth through lower interest rates, it must also avoid fanning inflationary flames that have not yet been fully extinguished. Its cautious posture reflects a longer-term strategy of preserving stability, even if that means standing in direct opposition to the president’s calls.

In an era where economic policymaking is increasingly politicized, the Federal Reserve’s commitment to independence and evidence-based decision-making stands out. By freezing interest rates for the third time despite mounting pressure from the White House, the Fed is reinforcing its role as a steady hand in uncertain times. Whether this patience will pay off or fuel further political conflict remains to be seen—but for now, it is clear that when it comes to interest rate policy, the Fed is answering to data, not demands.

U.S. Treasury Secretary and Chinese Vice Premier Hold Talks
From Tariffs to Supply Chains, a Signal of Comprehensive Dialogue
China Chooses Practical Gains Behind Its Assertive Diplomacy

The United States and China are set to sit down again at the trade negotiation table. While both sides maintain the façade of only responding to the other’s request—reflecting a battle of pride—they are, in reality, engaged in a strategic struggle for economic advantage. Learning from its experience during the first Trump administration, China approaches the talks with a pragmatic, benefit-driven strategy rather than a confrontational stance. The U.S., for its part, also appears to recognize the need for negotiations amid rising inflationary pressure. This round of talks is expected to focus less on immediate results and more on long-term structural changes, such as global supply chain realignment and technological dominance, potentially serving as a compass that redirects the flow of the global economy.

Rebuilding Dialogue Amid Harsh Rhetoric

On the 6th (local time), the U.S. Department of the Treasury announced that Treasury Secretary Scott Bessent and U.S. Trade Representative (USTR) head Jamison Greer plan to visit Switzerland on the 8th to meet with Chinese representatives for trade negotiations. Secretary Bessent stated, “We aim to realign the international economic order to better serve U.S. interests, and we hope for productive dialogue.”

That same day, former U.S. President Donald Trump also commented on China-related negotiations. Posting on social media, he claimed, “We’re not trading with them at all right now, which is causing significant economic pain on their side. We're not incurring any trade deficits because of this.” He added, however, “They’ve asked for talks and meetings, and we will meet with them at an appropriate time.”

China’s Ministry of Commerce confirmed in a separate announcement that Vice Premier He Lifeng will visit Switzerland for talks with the U.S. When asked by local media about contact with the U.S., the ministry said, “High-level U.S. officials have recently indicated a willingness to adjust tariffs and have reached out through various channels. After considering global expectations, China’s national interest, and the needs of U.S. industries and consumers, we decided to engage.”

Shared Recognition of Negotiation Need, Ongoing Behind-the-Scenes Coordination

This meeting was a foreseeable step. Earlier this month, a spokesperson for China’s Ministry of Commerce remarked, “The U.S. has conveyed its desire for talks multiple times. We are currently evaluating this.” This contradicts claims from the Trump administration that China initiated the talks, suggesting instead that the U.S. is under more pressure to act.

China has set the mutual removal of tariffs as a precondition for discussions, implying that sincere gestures must precede meaningful dialogue. A ministry spokesperson stated, “Failing to correct unjust tariff measures only shows the U.S. lacks sincerity, and mutual trust will further deteriorate.” The spokesperson also warned, “Empty words and coercion disguised as negotiations won’t work.”

As inflation continues to weigh heavily on the U.S., trade issues—directly tied to consumer prices—can no longer be ignored. Nevertheless, the U.S. maintains that China is the party eager to resume dialogue. On May 1, U.S. Secretary of State Marco Rubio said in a local interview, “China is reaching out. They want to negotiate with us,” and added, “A meeting between the two countries will take place soon.”

Previously, on April 9, the Trump administration announced a 145% tariff on Chinese imports. In response, China imposed a 125% tariff on U.S. goods and appeared disinterested in talks, maintaining a “hold-the-line” strategy. However, as the impact of the trade war becomes more evident, both sides now seem to recognize the necessity of dialogue. In the first quarter, U.S. GDP shrank by 0.3% year-on-year, while China’s Purchasing Managers’ Index (PMI) for April fell to 49.0—well below market expectations. A PMI below 50 is typically interpreted as a sign of economic contraction.

China Strengthens Readiness, Responds Quickly and Proactively

The U.S. and China had previously clashed over trade during the first Trump administration in 2018. At that time, the U.S. ignited tensions by imposing a 25% tariff on $34 billion worth of Chinese goods. China immediately retaliated with tariffs of equivalent scale on U.S. agricultural products, automobiles, and other goods. The conflict escalated further when the U.S. added another 10% tariff on $200 billion worth of Chinese imports.

In December of the same year, hopes of easing tensions emerged when Chinese President Xi Jinping and President Trump met during the G20 summit. However, negotiations broke down by May of the following year. The U.S. ramped up pressure by designating China a "currency manipulator," and China struck back by increasing tariffs on American products. Both nations suffered as a result, experiencing declines in consumption, exports, and investment confidence.

This backdrop explains why China is taking a different approach in the current negotiations. While outwardly warning that “coercion and extortion will not work,” it is simultaneously making it clear that it is open to dialogue if it serves its interests. Unlike in the past, when China would wait to react until after the U.S. took action, this time it has moved swiftly—reviewing U.S. statements and organizing its position almost immediately to push talks forward. The BBC commented that “China no longer remains passive in its response to the U.S., but is seeking to maintain strategic initiative.”

This shift in China’s stance stems in part from its reduced dependence on the U.S. According to the U.S. Trade Representative (USTR), last year’s total U.S.-China trade (imports and exports combined) amounted to $582.4 billion, a 12% decrease from $659.8 billion in 2018, when the trade conflict began. Notably, China’s export share to the U.S. fell from 20% in 2018 to 15% in 2023, and further down to 12% last year. This decline reflects China’s efforts to diversify its export markets, lending weight to the view that broad-based U.S. pressure on China may no longer be as effective as it once was.

India launches missiles at Pakistan-administered Kashmir and other areas
Suspends the Indus Waters Treaty and increases dam water flow
Pakistan: "Tampering with the Indus River is an act of war"

It has been confirmed that India launched a missile attack targeting Pakistan. The military clash between the two countries has intensified following a terrorist attack near Pahalgam in Indian-administered Kashmir. In response to the missile strikes, Pakistan retaliated by shooting down Indian fighter jets.

India–Pakistan 'Full-Scale War'

According to reports from AP and other foreign media on the 7th (local time), the Indian government announced that its military had launched "Operation Sindoor" early that morning, targeting nine sites in Pakistan-administered Kashmir. On the same day, Pakistani authorities reported that India had fired missiles at five locations, including Kashmir and Punjab Province, killing at least eight people, including children. According to Pakistani Defense Minister Khawaja Asif, the Pakistani military shot down at least five Indian fighter jets. However, a senior Indian official told local media that not a single Indian jet was lost during Operation Sindoor.

The conflict between the two nations escalated after a shooting terror attack near the resort town of Pahalgam in Indian-administered Kashmir on the 22nd of last month. The attack resulted in the deaths of 26 people, including tourists, and injured 17 others. India identified Pakistan as being behind the attack and imposed strong sanctions: canceling visas for Pakistani nationals, banning imports of Pakistani goods, prohibiting Pakistani ships from docking, and suspending postal exchanges. In response, Pakistan denied any involvement and took countermeasures, including banning Indian aircraft from its airspace, suspending trade, and canceling visas for Indian nationals.

Water Dispute Emerges Amid Rising Tensions

India has recently escalated provocations by blocking the flow of water toward Pakistan. According to The Times of Indiaand other sources on the 6th, the Indian government has begun increasing the water storage levels at the Baglihar and Salal reservoirs—both hydroelectric dams on the Chenab River located in Jammu and Kashmir, eastern Kashmir. This marks India's first visible action after declaring the suspension of the Indus Waters Treaty in response to the Pahalgam terror attack.

The Indus Waters Treaty, signed in 1960 under the mediation of the World Bank, is an international agreement between India and Pakistan that allows Pakistan to use six tributaries of the Indus River originating in India.

Pakistan, which heavily depends on hydropower, could suffer a severe blow if India increases dam storage levels. On May 3, Muhammad Khalid Jamali, Pakistan’s ambassador to Russia, warned on a state-run Russian broadcast, “Any attempt to block or divert the Indus River is an act of war against Pakistan. We will use all available force, including nuclear capabilities.” Defense Minister Asif also stated, “Acts of aggression aren't limited to bullets or artillery. Blocking or diverting the Indus River could lead to deaths from hunger and thirst.”

Was This a Ticking Time Bomb?

As tensions escalate rapidly, some experts argue that military conflict between India and Pakistan was all but inevitable. One foreign policy expert remarked, “The relationship between the two nations was like a ticking time bomb. The Pahalgam attack simply served as a convenient trigger for an armed conflict.”

Hostility between India and Pakistan dates back decades, beginning with their partition along religious lines—Hindu-majority India and Muslim-majority Pakistan. The first clash occurred shortly after their separation in 1947 over the Kashmir region, a mountainous area bordering India, Pakistan, and China. The region, roughly 220,000 square kilometers in size (similar to the Korean Peninsula), has long been contested.

Though Kashmir’s population favored joining Muslim-majority Pakistan, its ruler at the time, Maharaja Hari Singh, was Hindu and chose to accede to India. This decision triggered an invasion by tribal militias backed by Pakistan, which escalated into a full-scale war. In 1949, the UN brokered a ceasefire, dividing Kashmir into Pakistan-administered (Azad Kashmir) and Indian-administered (Jammu and Kashmir) regions. The ceasefire line established in 1949 was renamed the Line of Control under the Simla Agreement in 1972.

The problem is that military clashes between the two nations have resumed over the past six years. In 2019, the Indian Air Force crossed the Line of Control for the first time since 1971, conducting airstrikes in Pakistan. This was in retaliation for a suicide bombing in Indian-administered Kashmir that year, which India blamed on a Pakistan-based terror group. Twelve Mirage fighter jets dropped bombs on Pakistani territory, prompting Pakistan’s air force to shoot down an Indian jet, bringing both nations once again to the brink of military confrontation.

HDB: An Essential Technology for HBM4 Commercialization
Optimistic Outlook with Advances in Precision Technology
But for Equipment Firms, a Profitable Business Model Is Still a Long Way Off

As demand for high-performance computing and artificial intelligence intensifies, high-bandwidth memory (HBM) is taking center stage in the semiconductor world. In this rapidly evolving landscape, hybrid bonding (HDB) has emerged as the next critical step in pushing HBM beyond its current limitations. At the forefront of this transformation are Samsung Electronics and SK Hynix, both accelerating investments in HDB technology to meet the growing need for denser, faster, and more power-efficient memory. But as the industry embraces this next-generation packaging innovation, it also stands on the brink of a profound restructuring — particularly in the semiconductor equipment supply chain.

While HDB promises performance breakthroughs and architectural advantages, industry insiders warn that the benefits may not be equally shared. In particular, smaller equipment manufacturers are raising concerns about profitability and bargaining power in a market increasingly controlled by tech giants.

Overcoming Barriers: The Rise of Hybrid Bonding

The introduction of HDB technology is not just a shift — it’s a response to the very real physical and engineering limits of existing HBM production methods. For Samsung, the traditional TC-NCF (Thermo-Compression Non-Conductive Film) process has been the backbone of HBM manufacturing. This method inserts ultra-thin insulating films between stacked DRAM chips and compresses them with heat, effectively filling inter-chip voids and preventing warpage. However, ensuring uniform heat and pressure across more than a thousand micro bumps is technically challenging. The result has been a relatively high defect rate, despite the method’s structural advantages.

SK Hynix took a different path with the MR-MUF (Molded Reflow-Mold Underfill) process. This approach involves stacking and soldering chips in bulk inside high-temperature ovens, then injecting a sticky liquid underfill between soldered layers. The process minimizes thermal damage to chips, but it struggles with scaling down inter-chip spacing, making it less viable for ultra-dense stacking needed in future HBM designs.

Hybrid bonding was developed as a solution to these issues. Unlike previous techniques that rely on films or liquids, HDB uses only solid-state materials — insulators and conductive metals like copper — to bond chips. This enables tighter stacking with increased electrical performance, improved thermal management, and the potential to recover over 80 micrometers of usable space between chips. These advantages have earned HDB the label of a "dream packaging technology" in the industry.

Yet for years, commercialization of hybrid bonding remained a distant goal due to the complexity of bonding dissimilar materials within a single wafer without adhesives. That changed in 2024, when Samsung and SK Hynix initiated substantial investments in HDB-capable infrastructure. What was once considered experimental is now a strategic necessity. Industry experts now believe that HDB is no longer just a trend — it has become a minimum entry requirement for future participation in the HBM market, particularly starting with HBM4 and HBM4E, which are planned for production by Samsung and SK Hynix respectively.

As one expert in the field noted, this is a defining moment in memory packaging. The evolution of HBM technology has reached a point where even the basic semiconductor architecture is being redesigned to overcome the miniaturization limits of traditional bonding methods.

Disrupting the Equipment Landscape: New Opportunities and Old Challenges

The ripple effect of hybrid bonding adoption is being felt most acutely in the semiconductor equipment ecosystem. With HDB expected to become the dominant technique for next-generation HBM stacking, the equipment supply chain is undergoing a dramatic shift. The intricate requirements of HDB — including sub-micron alignment, precision compression, and plasma activation — demand a far higher level of complexity than legacy processes.

Historically, the supply of critical equipment for HBM processes has been dominated by a few major players, including U.S.-based Applied Materials (AMAT) and Japan’s Tokyo Electron (TEL). But that dominance is beginning to erode.

Samsung, in particular, has been actively reshaping its supplier landscape. In June 2023, the company published a technical study on “D2W Hybrid Cu Bonding Technology for HBM Stacking,” revealing that stacking up to 17 chips within a 775µm form factor would require minimizing spacing through Hybrid Copper Bonding (HCB). Using equipment developed by SEMES, Samsung successfully fabricated a 16-layer HBM3 sample, which functioned normally. This achievement marked a deliberate departure from its dependency on traditional foreign suppliers, signaling a new era of collaboration with mid-sized equipment firms in both South Korea and abroad.

SK Hynix is following a similar path. For years, it relied exclusively on Hanmi Semiconductor for HBM manufacturing equipment. However, in a move that broke this exclusivity, SK Hynix recently signed a ₩42 billion ($30 million) supply deal with Hanwha Semitek, disrupting the long-standing monopoly. As the global HBM market leader, SK Hynix now views the development of a diversified vendor base as crucial to maintaining competitiveness and ensuring a robust, flexible production pipeline.

Still, not all participants in the supply chain are benefitting equally. Smaller Korean equipment companies, despite their role in enabling this technological leap, often lack the bargaining power to negotiate favorable terms. One executive from a domestic equipment supplier shared that while their firm delivers top-tier technology to major clients like Samsung and SK Hynix, they have almost no leverage to raise unit prices or renegotiate supply conditions. In effect, these companies are playing an indispensable role in a system where profits remain elusive, even for technically superior suppliers.

Worse still, as customization demands grow — particularly for HDB-specific adaptations — the risk of under-recovered investments increases. The same executive explained that many small equipment firms are now absorbing the burden of costly R&D with no guaranteed return, making it increasingly difficult to justify participation in what is otherwise a booming sector.

Samsung’s Strategic Comeback and the Uneven Playing Field

Samsung’s push for hybrid bonding is about more than just keeping pace — it’s a bold attempt to reclaim leadership in the HBM sector. The company has lost ground in recent years, but it now sees HDB as the key to a dramatic turnaround.

In February 2025, Samsung installed hybrid bonding equipment at its Hwaseong facility in Gyeonggi Province and hosted a high-profile ceremony to underscore the significance of the move. Speaking at the event, Song Jae-Hyuk, Chief Technology Officer of the Device Solutions division, described the company’s position through a sports analogy. It was as if Samsung had led the game until the ninth inning, only to lose the lead — and now, entering the bottom of the ninth, the first step to victory was getting the leadoff runner on base. Implicit in his message was the belief that HDB would be the decisive catalyst for a comeback.

But as Samsung charges forward, many in the equipment sector are left to grapple with the uncomfortable reality that technological advancement does not guarantee equitable gains. The current structure of the market leaves smaller vendors in a bind — vital to innovation, yet excluded from the pricing power that defines profitability. Despite their contributions, they continue to navigate a system where the giants dictate the terms.

As the industry steps into the HBM 16-stack era, hybrid bonding is clearly the way forward. It offers a solution to long-standing engineering problems, unlocks new packaging efficiencies, and aligns with the future needs of AI and high-speed computing. But this progress comes with growing pains. Whether the benefits of this transformation will extend beyond the largest players — and empower the broader semiconductor ecosystem — remains one of the most pressing questions facing the industry today.

Jensen Huang, NVIDIA CEO, Voices Concerns Over U.S. Semiconductor Export Restrictions
Will Chinese Firms Like Huawei Fill the Void Left by U.S. Companies?
Huawei Accelerates Push for 'Semiconductor Independence' with Strengthened In-House Production

As the United States doubles down on semiconductor export restrictions aimed at curbing China's technological advancement, concerns are mounting that these very policies may be backfiring. Jensen Huang, CEO of NVIDIA, a dominant force in the global AI chip market, has issued a stark warning: the U.S. government's regulatory stance may be inadvertently accelerating Huawei’s rise in the artificial intelligence hardware space. While intended to protect national security and preserve America's competitive edge, these measures may be creating a vacuum that Chinese tech giants are eager—and increasingly able—to fill.

With Huawei rapidly scaling its AI chip capabilities, what was meant to slow China down may be pushing it toward greater self-reliance and innovation. The consequences of this shift, Huang suggests, could be profound, not only for U.S. businesses but for the future of global technology leadership.

Export Bans and the Risk of Losing Ground

On May 6, during the 2025 Milken Conference in Los Angeles, Jensen Huang publicly voiced his discontent with the ongoing U.S. semiconductor export restrictions against China. He acknowledged the logic behind restricting access to critical technologies on the grounds of economic advantage or national security but argued that this view fails to consider a key point: governments like China’s are not constrained in utilizing their domestic computing power.

“They will secure the computing resources they already have,” Huang said, emphasizing that restricting exports does not equate to stalling technological progress in rival nations. NVIDIA, which commands an estimated 90% of the global AI chip market, has been barred from selling its products to Chinese customers due to these restrictions. This, Huang warned, has created a dangerous opportunity for competitors.

“If we do not supply products to a certain market and completely withdraw, someone else will step in,” he explained. “For example, Huawei is one of the most formidable tech companies in the world, and they could take that spot.”

Huang further stressed the strategic imperative of ensuring that American technological standards become the global foundation for artificial intelligence. “We need to make American standards the global standards, and ensure that AI is built on top of American technology,” he said.

Beyond geopolitical and strategic considerations, Huang highlighted the immense economic losses the U.S. is incurring. With China’s AI chip market projected to reach $50 billion in just a few years, the stakes are high. “This was a business opportunity we could have enjoyed,” he said. “If we could bring that kind of revenue back to the U.S., we could return it as tax dollars, create jobs, and significantly advance our technology.”

Huawei’s Strategic Leap in Semiconductor Technology

At the center of Huang’s concerns is the remarkable pace at which Huawei is capitalizing on the space vacated by American firms. The company has been accelerating its push into the AI chip sector, determined to reduce its reliance on foreign technologies. A Financial Times report published on May 4 revealed that Huawei is currently constructing an advanced semiconductor production line at its facility in Shenzhen, with the goal of manufacturing its own high-performance Ascend AI Processors.

These processors are designed to compete with those made by international giants like NVIDIA, ASML, SK Hynix, and TSMC. In 2023, Huawei introduced the Ascend 910B, followed by the Ascend 910C in 2024. The company is now reportedly exploring the feasibility of a newer version, tentatively named the Ascend 910D, and is in talks with select partners to assess its technical viability.

What distinguishes Huawei’s strategy is not just its design ambitions but its push for full supply chain localization. According to Dylan Patel, founder of the semiconductor consulting firm SemiAnalysis, Huawei is undertaking an unprecedented effort to develop every segment of the AI chip supply chain domestically. “From wafer manufacturing equipment to model building, Huawei is attempting to localize everything,” Patel explained. “No company has ever tried to do it all before.”

This ambition is matched by strategic foresight. Long before the U.S. imposed its export controls in 2020, Huawei had already begun stockpiling critical chip components. A March report by the Center for Strategic and International Studies (CSIS) disclosed that Huawei had received over 2 million logic dies for the Ascend 910B from TSMC, a move that allowed it to hedge against future supply disruptions. Two such dies can be combined to form the Ascend 910C chip, which means Huawei has the material capacity to manufacture 1 million chips. Even with a 75% yield rate, that translates into 750,000 fully functional AI chips—a formidable reserve for any tech company.

China’s Domestic Chip Production Gains Momentum

Once Huawei’s stockpile of TSMC-sourced dies is exhausted, Chinese foundries are expected to fill the gap. The Semiconductor Manufacturing International Corporation (SMIC), a leading Chinese chipmaker, has already started producing the Ascend 910B’s logic dies using deep ultraviolet (DUV) lithography technology. Because DUV equipment has not been banned under current U.S. export controls, SMIC remains a viable domestic supplier. However, its chip yield rate remains low—reportedly only about 20%.

Even so, SMIC’s capacity is expanding. CSIS estimates that by the end of 2024, the company had likely achieved its goal of producing 50,000 7nm wafers per year. If all of these wafers were eventually used for AI chip production—an optimistic assumption—Huawei could potentially scale up production to millions of chips annually, provided SMIC can improve its efficiency.

Meanwhile, the U.S. continues to escalate its restrictions. In addition to blocking high-performance AI chips like NVIDIA’s H100, even lower-performance models such as the H20, designed specifically for the Chinese market, are now under scrutiny. Discussions are also underway to embed geolocation tracking technologies into U.S.-made chips as an additional layer of control. But such measures may prove ineffective against a competitor that has already built a resilient and increasingly self-sufficient ecosystem.

As one market insider put it, “It’s questionable how effective these restrictions will be, given Huawei’s already robust domestic production base.”

In summary, Huang’s warning is not a critique of national security priorities but a call for strategic recalibration. If America’s goal is to maintain technological leadership in the AI age, then isolating itself from the world's second-largest economy may prove to be a costly miscalculation. In trying to contain China, the U.S. may be handing it the tools to thrive.

Samsung Eyes Mega M&A Revival: A Strategic Push Beyond Harman
From Robots to Telecom: Inside Samsung’s High-Stakes Hunt for Its Next Growth Engine
Armed with 100 Trillion Won, Samsung Charts Bold New Course in Robotics and AI

In the aftermath of Chairman Lee Jae-yong's acquittal and Samsung Electronics' public recommitment to bold investments, the South Korean tech titan is now standing at a critical inflection point. As its once-mighty semiconductor division faces headwinds and the global tech landscape pivots toward AI, robotics, and next-gen communications, Samsung is shifting gears. With over 100 trillion won in cash reserves and rising investor pressure to secure new growth engines, Samsung is actively hunting for what industry insiders have dubbed a "second Harman"—a transformative mega-deal that can redefine its future.

Samsung's acquisition of Harman International in 2017 remains the benchmark for successful large-scale M&A in South Korea. The $8 billion acquisition gave Samsung a strong foothold in automotive electronics and premium audio, and seven years on, Harman has become a cash cow for the conglomerate. Now, with mounting urgency, the company is looking to replicate that success through strategic acquisitions in high-growth sectors like AI, robotics, Meditech, HVAC, and telecommunications. This article explores Samsung's current M&A playbook, the critical role of robotics and AI, and the industry dynamics shaping its ambitious global strategy.

From Humanoid Dreams to Corporate Reality: Samsung Bets Big on Robotics

One of the most compelling signs of Samsung's strategic pivot toward the future is its aggressive investment in robotics. At the heart of this push is its acquisition of a controlling stake in Rainbow Robotics, a Korean startup specializing in humanoid robot development. Founded in 2011 by researchers at KAIST’s Hubo Lab, Rainbow Robotics has been behind Korea’s first bipedal robot, Hubo. Samsung initially acquired a 14.7% stake in 2023 for 86.8 billion won and then exercised a call option to raise its ownership by 20.1%, incorporating the company as a subsidiary.

This investment is more than a financial transaction; it is a signal of intent. In an era where artificial intelligence is rapidly transforming industries, humanoid robots are increasingly being seen as the next frontier in automation. At CES 2025, NVIDIA CEO Jensen Huang declared that the robotics industry is nearing its “ChatGPT moment,” unveiling the company’s robot development platform "Cosmos" alongside a humanoid machine. Samsung, recognizing this shift, formed the Future Robot Promotion Group under Vice Chairman Han Jong-hee and appointed Professor Emeritus Oh Jun-ho, a founding member of Rainbow Robotics, to lead the initiative.

Samsung is now positioning itself to dominate the robotics ecosystem by combining Rainbow Robotics’ foundational technologies with its own strengths in semiconductors, displays, and connectivity. The company envisions a future where humanoid robots are integrated into households, hospitals, factories, and retail environments. As AI becomes more embedded into physical systems, Samsung's early investment in robotics could serve as the springboard to a multi-billion dollar market.

This is particularly significant given the IT industry’s increasing convergence between hardware and AI. Samsung’s robotics strategy is designed not merely for incremental gains but to establish long-term market leadership in an emerging sector. By leveraging Rainbow Robotics as a core platform, Samsung is building a diversified robot lineup and investing in the original technologies that could define the next industrial revolution.

Small Bets, Big Vision: Building a Future-Ready Ecosystem Through Targeted M&A

While the Harman acquisition remains Samsung’s most high-profile deal to date, the company has not been idle in the intervening years. Between 2021 and 2023, Samsung made equity investments in more than 260 companies, spanning a wide range of next-generation technologies. These smaller-scale transactions, though modest in individual size, collectively reveal a highly focused investment philosophy centered on AI, Meditech, and smart connectivity.

In the medical field, Samsung Medison acquired the French startup Sonio in 2023. Specializing in AI-powered ultrasound diagnostics, Sonio has carved out a niche in obstetric and gynecological imaging. The acquisition enhances Samsung’s capabilities in AI diagnostics, further integrating smart healthcare into its business model.

In the AI domain, Samsung Research led its first M&A by acquiring Oxford Semantic Technologies (OST), a British startup focused on knowledge graph technology. OST's software mimics human cognitive processes by storing and retrieving data in ways similar to human memory. Samsung had been collaborating with OST since 2018, validating its technology before executing the acquisition. This deal demonstrates Samsung’s long-term strategy to embed AI not only in software but also at the chip and device levels—what industry analysts refer to as "on-device AI."

Moreover, Samsung’s acquisition of the music streaming platform Rune via Harman illustrates its commitment to blending content and hardware. As smart devices become more immersive, audio and visual integration are critical differentiators. These investments in AI, health tech, and content services suggest Samsung is laying the foundation for a highly synergistic ecosystem where every device—from phones to home appliances—communicates seamlessly.

Despite the relatively low profile of these deals, they are crucial in Samsung's effort to discover and incubate future growth drivers. The collective impact of these transactions is akin to planting seeds in various high-potential sectors, with the intent of growing new revenue streams organically or through further consolidation.

Mega M&A on the Horizon: Is Nokia's Network Business the Next Target?

As the market speculates about Samsung’s next mega-deal, attention has turned to Nokia’s mobile network division. In August 2024, Bloomberg reported that Samsung was among the prospective buyers of the unit, which supplies base stations, wireless servers, and networking technology to telecom operators worldwide. This division accounted for 44% of Nokia’s total revenue in 2023 and is reportedly valued at around $10 billion (roughly 14 trillion won).

If completed, such an acquisition would be transformative. Samsung currently ranks fifth in global telecommunications equipment with a 6.1% market share, far behind Huawei (31.3%), Ericsson (24.3%), and Nokia (19.5%). Acquiring Nokia’s mobile network division could catapult Samsung to the No. 2 spot globally, significantly boosting its competitiveness in 5G infrastructure and beyond.

However, M&A of this magnitude is not without risk. Regulatory scrutiny, particularly in the U.S. and EU, could pose significant hurdles. Moreover, the cultural and operational integration of a telecom infrastructure giant is vastly more complex than that of a consumer audio brand like Harman. While Nokia has denied any ongoing discussions and Samsung has declined to comment, industry watchers believe the Korean tech giant is actively evaluating the opportunity.

What gives Samsung the edge is its financial muscle. As of Q3 2024, the company held over 104 trillion won in cash reserves, including 43.1 trillion won in cash and equivalents and another 60.6 trillion won in short-term financial instruments. Even after accounting for liabilities, Samsung has more than 87 trillion won in net liquidity. This gives it the freedom to pursue large-scale deals without undermining its balance sheet.

Still, not all analysts are convinced that mega-M&A is the right move at this moment. Some suggest Samsung should focus on revitalizing its core semiconductor business before making bold bets. Park Joo-geun, CEO of Leaders Index, argued that Samsung's strength lies in device manufacturing and emphasized the importance of reinforcing its technological edge in areas where it already leads.

That said, history supports Samsung’s ability to make smart, calculated M&A moves. Harman’s performance provides ample justification: since its acquisition, operating profit has ballooned from 60 billion won in 2017 to 1.3 trillion won in 2024. The cumulative profit over five years is nearly half of the acquisition cost. Much of Harman’s growth has come from increased demand for automotive electronics, premium audio, and infotainment systems supplied to global carmakers like BMW and Toyota.

Samsung now seeks to replicate this success. Whether in robotics, telecom, or meditech, the playbook is clear: find undervalued or high-potential companies in transformative sectors, integrate them into Samsung’s robust value chain, and turn them into profit engines.

Samsung Electronics is at a pivotal crossroads. With financial firepower, visionary leadership, and a proven M&A track record, it is uniquely positioned to execute another game-changing acquisition. The acquisition of Rainbow Robotics signals a new direction toward robotics and AI, while smaller deals in health tech and semantic AI lay the foundation for an integrated future ecosystem.

The market’s eyes are now on Samsung’s next big move. Will it be a telecommunications giant like Nokia, or another breakthrough in robotics or AI? One thing is certain: with Chairman Lee Jae-yong back in the picture and the Future Business Planning Group in full swing, Samsung is no longer content with playing it safe. As it seeks a “second Harman,” the company is betting big on the future—and has the means, motive, and momentum to make it happen.