South Korea

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TSMC and Samsung Accelerate 2 nm Chip Production Amid Intensifying AI Market Demand

Dec. 2, 2025 | Technology & Innovation

Leading semiconductor manufacturers are boosting production capacity and deploying advanced chip technologies to meet growing AI and high-performance computing demands.

**TSMC is ramping up its 2-nanometer fabrication capacity from seven to ten fabs in the Southern Taiwan Science Park, fueled by a roughly NT$900 billion investment.**
Surging demand for AI and high-performance computing chips—especially GPUs and CPUs for AI servers—drives the company to target requirements of the early 2030s. About 70 percent of TSMC’s US$40–42 billion capital expenditure in 2025 will go to advanced 2 nm and 3 nm processes. Domestic political pressures reinforce TSMC’s decision to keep its most advanced production facilities in Taiwan.

**Despite this ramp-up, supply constraints and higher pricing challenge TSMC’s 2 nm business.**
Its 2 nm chips cost at least 50 percent more than 3 nm devices, prompting some fabless companies to explore alternative suppliers. Samsung stands to gain customers seeking leading-edge production that offers more favorable pricing or availability.

**Samsung Electronics reports that its 2 nm process yields have climbed to 55–60 percent, approaching the level needed for viable mass production.**
Tesla, under a long-term contract for next-generation AI5 and AI6 chips, and Samsung’s own Exynos 2600 mobile application processor serve as key validation platforms to further boost yields. Samsung plans to start full-scale 2 nm manufacturing at its new Taylor, Texas, facility and integrate the technology into its flagship Galaxy S26 smartphone in 2026.

**Alongside its 2 nm efforts, Samsung has merged its dedicated high-bandwidth memory (HBM) development task force into the broader DRAM Development Office, consolidating process, design, and advanced packaging functions.**
This reorganization supports a unified memory strategy focused on HBM4 and HBM4E production and aligns with the upcoming Pyeongtaek P5 “AI mega fab.” That facility will co-locate HBM4/5 production alongside 3 nm and 2 nm foundry operations and advanced packaging, with the HBM design team centrally connecting foundry and packaging activities.

**Over the next two to three years, TSMC and Samsung will intensify their competition around production capacity, process yields, design support, pricing, and infrastructure development.**
The result of this contest will shape availability and costs of leading-edge semiconductor technologies, particularly in AI and high-bandwidth memory applications.

OpenAI’s High-Stakes Expansion Amid Surging AI Integration and Intensifying Competition

Dec. 2, 2025 | Competitiveness

The rapid evolution of artificial intelligence is transforming industries from search to education and testing the resilience of major developers.

**Since marking its third anniversary, ChatGPT has deepened AI integration across search, translation, coding, customer service and education.**
AI has emerged as a transformative platform that reshapes industrial structures and work dynamics. OpenAI, the developer of ChatGPT, confronts rising operational costs, fierce global competition and ongoing controversies over user safety and ethics.

**OpenAI has funded its rapid growth with massive investments in large-scale data centers and aggressive expansion strategies, yet it continues to run a substantial deficit.**
HSBC predicts annual revenue will climb from $12.5 billion in 2025 to $213.6 billion by 2030, while operating losses may widen to $76.5 billion. Key cost drivers include a revenue-sharing agreement with Microsoft, high costs of goods sold, extensive research and development expenditures and significant administrative expenses. Contracts with Microsoft and Amazon for cloud computing capacity total $250 billion and $38 billion, respectively, and could reach a cumulative $1.8 trillion. As infrastructure builds accelerate, annual data center rental costs could approach $620 billion.

**To support projected demand, OpenAI plans to invest $18 billion in the Stargate Project, partnering with SoftBank and Oracle to build five new AI data centers and secure 250 GW of capacity by 2033.**
Achieving financial sustainability depends on growing the user base to roughly 3 billion by 2030 to offset soaring infrastructure and operational expenses. Nvidia GPU–based servers require substantial power and physical space, further intensifying cost pressures.

**Competition in the AI sector is intensifying as rivals develop alternative hardware and models.**
Google is preparing Gemini 3, which will run on its proprietary Tensor Processing Units and aim to outperform GPU-based systems in speed, energy efficiency and multimodal tasks. Meta is reportedly evaluating Google’s TPUs over Nvidia GPUs. Industry experts expect future competition to hinge more on data center architecture, power efficiency and cost-effective computation than on model accuracy alone, making OpenAI’s reliance on Nvidia GPUs a potential vulnerability.

**OpenAI also faces controversies around user safety and content moderation.**
Lawsuits claim ChatGPT content contributed to harmful outcomes, including a teenage suicide; OpenAI rejects legal responsibility but acknowledges inherent risks in human-AI interactions. After its GPT-4–powered Kuma AI teddy bear provided inappropriate information to minors, OpenAI suspended the product. Meanwhile, the company plans to introduce adult content features with age and identity verification, a strategy analysts link to efforts to diversify revenue through premium subscription tiers.

Monitored Intelligence for South Korea - Dec. 2, 2025

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Kim Jong-un pledges new missions, assets for air force as branch marks 80th anniversary

Joongang Ilbo | English | News | Dec. 2, 2025 | North Korea

North Korean leader Kim Jong-un pledged new missions and strategic military assets for the Korean People's Army Air Force during an event commemorating its 80th anniversary on November 28, 2025. He emphasized the air force’s role in the country’s nuclear deterrence and modernization efforts, though he did not specify the exact new assets being deployed. Military sources suggest these assets likely include long-range air-to-ground missiles mounted on Su-25 aircraft.

Photos released show a missile resembling Germany’s Taurus KEPD 350 or Russia’s Kh‑59MK2 cruise missiles, capable of striking targets from beyond an adversary’s air defense range. Analysts believe North Korea aims to extend the operational reach of its aircraft through these long-range precision strike capabilities, potentially bypassing South Korean and U.S. air defense systems. Additionally, a new domestically produced air-to-air missile, similar to the German IRIS-T or China’s PL-12, was displayed on a MiG-29 fighter jet.

The event also unveiled two strategic reconnaissance drones, the Saetbyeol-4 and Saetbyeol-9, North Korea’s versions of the U.S. Global Hawk and Reaper drones respectively. Kim Jong-un highlighted the importance of countering reconnaissance and military provocations, referencing the unmanned aircraft operations over Pyongyang in late 2024. North Korea has not showcased any anti-drone weapons, but the leader stressed the need to repel espionage and incursions into its airspace with strong offensive and defensive measures.

Kim’s daughter Ju-ae attended the event, marking her first public appearance in about three months. The South Korean special counsel indicted former President Yoon Suk Yeol and others for espionage related to the drone incident near Pyongyang. North Korea’s foreign ministry released a strong statement condemning South Korean provocations following those incidents.

HD Hyundai Heavy Industries merges with aims to solidify No. 1 shipbuilder position

Joongang Ilbo | English | News | Dec. 2, 2025 | UndeterminedMergers & Acquisitions

HD Hyundai Heavy Industries and HD Hyundai Mipo have completed their merger and are now operating as a single entity named HD Hyundai Heavy Industries. This consolidation aims to strengthen their position as the world’s leading shipbuilder by maximizing synergies and expanding market presence. The merger aligns with similar moves by competitors in China and Japan and seeks both quantitative and qualitative growth in the global shipbuilding industry.

The merged company plans to focus on cooperation with the U.S. market under the "Make American Shipping Great Again" initiative, along with bolstering its defense sector, targeting 37 trillion won ($25.2 billion) in revenue by 2035, with 10 trillion won from defense. It also aims to accelerate development in environmentally friendly and next-generation shipbuilding technologies by integrating R&D and design capabilities.

The new HD Hyundai Heavy Industries intends to diversify into special-purpose vessels, including icebreakers, responding to increasing demand from Arctic development. Chairman Chung Ki-sun expressed optimism about technological innovation following the merger, emphasizing employee collaboration. Actor Kim Woo-bin also conveyed support for the merger as a catalyst for a stronger shipbuilding industry in Korea.

Rival parties resume talks to find compromise on budget, corruption probe

Yonhap | English | News | Dec. 2, 2025 | Political Scandal or Corruption

Ruling and opposition party officials in South Korea resumed talks on November 30, 2025, to resolve differences over contentious issues including next year’s budget and a parliamentary probe into the prosecution’s decision not to appeal a corruption case. Earlier discussions at the National Assembly failed to reach an agreement. Key items under negotiation include policy funds, local gift certificates, special activity expenses of the presidential office, education, taxes, and corporate tax rates.

The Democratic Party (DP) supports reversing corporate tax cuts made under the previous Yoon Suk Yeol administration, while the opposition People Power Party (PPP) opposes tax increases due to concerns about business impacts. Another major point of contention is a parliamentary investigation into the prosecution's choice to forgo an appeal in a real estate development corruption case involving private asset management firms and former Mayor Lee Jae Myung. The parties face pressure to compromise, especially on the budget, with only two days remaining before the deadline for passing the 2026 budget.

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