▲ AI PRISM* Personalized Economic Briefing
* Editor's note: AI PRISM (Personalized Report & Insight Summarizing Media) is an artificial intelligence-based personalized news recommendation and summary service developed with support from the Korea Press Foundation. It selects and delivers six news items tailored to each reader type.
[Key Issue Briefing]
■ Shift to expansionary fiscal policy: With the government unveiling next year's budget proposal, South Korea has joined the United States, China and Japan in full-fledged expansionary fiscal competition. Because the fiscal expansion rests on tax revenue generated by the semiconductor boom, analysts say a downturn in the chip cycle could undermine the goal of keeping the managed fiscal deficit within 3% of gross domestic product.
■ China's HBM push: ChangXin Memory Technologies, China's largest memory chipmaker, has begun small-scale production of HBM3E, an advanced high-bandwidth memory product, narrowing the technology gap with the top three memory makers to roughly one generation. U.S. export and equipment restrictions and low yields remain obstacles, however, and the actual gap with leading companies is still believed to be three to five years.
■ Investment talks with U.S.: Industry Minister Kim Jung-kwan traveled to the United States again after two weeks for final-stage talks on Korean investment in the U.S. with Commerce Secretary Howard Lutnick. With Seoul and Washington set to announce their first project in September, talks have been delayed as the U.S. side calls for a larger project budget.
[Top News for Corporate CEOs]
1. Budget to Top 1,000 Trillion Won by 2030; A Second Chip Industry Needed to Avert Fiscal Cliff
- Key summary: The government has joined expansionary fiscal competition in earnest, unveiling a budget proposal for next year of 820.9 trillion won. Total spending next year will rise 12.8% from this year's main budget, surpassing the 10.6% increase in 2009 in the immediate aftermath of the global financial crisis. With average annual spending growth set at 8.4% through 2030, total spending will reach 1,005.2 trillion won. Behind this expansionary stance is tax revenue from the semiconductor boom: national tax revenue next year is projected at 584.4 trillion won, up 194.2 trillion won from this year. The managed fiscal deficit, however, will shrink sharply from 107.8 trillion won this year to 3.1 trillion won next year before widening again to 100.8 trillion won in 2030. Cho Yong-beom, vice minister of the Ministry of Planning and Budget, explained that the government lowered the spending growth rate in stages because it cannot assume semiconductor tax revenue will continue.
2. China's CXMT Begins HBM3E Trial Production, Plans Wider Output Next Year
- Key summary: CXMT has already begun small-scale production of HBM3E and plans to significantly increase volumes starting next year, according to a report by IT news outlet The Information. Chinese fabless companies including T-Head, an Alibaba chip design unit, and Cambricon Technologies are testing CXMT's HBM3E in their in-house processors, and if plans proceed, related products could reach the market as early as next year. The United States, however, has restricted exports of advanced HBM to China since 2024, and CXMT is also barred from purchasing the advanced foreign equipment used by leading manufacturers. Technologically, CXMT has yet to resolve low yield problems, leaving a gap with leading companies believed to be three to five years. Meanwhile, according to Bloomberg, CXMT's first-half revenue was 150.03 billion yuan (about 30.7 trillion won), nearly a tenfold increase from a year earlier and more than double its full-year revenue last year.
3. Kim Jung-kwan Returns to U.S. After Two Weeks for Final Investment Talks
- Key summary: Industry Minister Kim Jung-kwan departed for the United States again after two weeks to attend a Group of 20 innovation ministers' meeting. Meeting reporters at Incheon International Airport on the 1st, Kim said a meeting with Lutnick was scheduled during his U.S. trip and that the investment terms discussed domestically needed to be finalized. Under a trade agreement reached last year, South Korea is to execute $350 billion in investment in the United States in exchange for Washington lowering tariffs on Korean goods to 15%. Energy-related projects, including construction of a liquefied natural gas combined-cycle power plant in Texas, are being considered as the leading candidate for the first project. Talks have been delayed, however, as the U.S. side has asked that the project budget be raised from around $20 billion to about $25 billion, and the rate of return that will determine the commercial viability of the investment project also remains a point of contention.
[Reference News for Corporate CEOs]
4. 821 Trillion Won Super Budget Includes 104 Trillion Won in Reserves
- Key summary: The government has set total spending next year at 820.9 trillion won, 93 trillion won more than this year's main budget, with the 12.8% increase the largest on record. With national tax revenue surging more than 194 trillion won on the semiconductor boom, total revenue is projected at 880.8 trillion won, marking the first time since the fiscal 2019 main budget, eight years ago, that total revenue exceeds total spending. The government also plans to set aside 162.3 trillion won of the increased tax revenue in a future response fund, keeping more than 104 trillion won of that as a form of emergency reserve. By sector, health, welfare and employment received the largest allocation at 289 trillion won. National debt, however, will rise 106 trillion won to 1,519.8 trillion won, and Kim Woo-chul, a professor at the University of Seoul, noted that it is difficult to conclude fiscal soundness has fundamentally improved if debt keeps rising even as the managed fiscal balance approaches equilibrium.
5. [Exclusive] Savings Banks' Real Estate Delinquencies Hit 2.7 Trillion Won, Up 15% This Year
- Key summary: Delinquencies on real estate loans at savings banks are growing rapidly as rising market interest rates compound a slump in provincial property markets. A Seoul Economic Daily review of first-half management disclosures from all 79 savings banks nationwide found that delinquencies tied to real estate project financing, construction and real estate stood at about 2.6943 trillion won as of the end of June, up 15.6% in six months from the end of last year. Over the same period, outstanding real estate-related loans rose just 0.08% to 24.2159 trillion won, indicating that asset quality deteriorated sharply in a short span. Kim Dae-jong, a professor of business administration at Sejong University, attributed the trend to the simultaneous effects of the provincial property downturn, rising unsold homes, higher construction costs and prolonged high interest rates. Concerns about widening distress among non-bank lenders are mounting given the possibility of further rate increases by the Bank of Korea, which has raised its base rate to 3%.
6. Samsung Electronics (005930.KS): Optimizing Logic and Memory Layout to Break AI Chip Limits
- Key summary: Samsung Electronics has presented technology that optimizes the layout of logic and memory chips as its bid to break through performance limits in next-generation artificial intelligence chips. Choi Jang-seok, vice president and head of product planning at Samsung Electronics' memory business division, unveiled the company's CUBE strategy — an acronym for capacity, utilization, bandwidth and energy efficiency — in a keynote speech at SEMICON Taiwan 2026 in Taipei, saying the key to three-dimensional memory lies not in stacking chips but in how each layer is used. That vision is taking shape in a product road map that includes eighth-generation HBM5, which doubles the performance of seventh-generation HBM4E, and zHBM, which raises performance up to eightfold over HBM4E while cutting thermal resistance by as much as 90%. Meanwhile, according to Counterpoint Research, Samsung Electronics ranked first in the global DRAM market in the second quarter of this year with a 39% share, and its annual DRAM production capacity of 8.175 million wafers, based on Omdia data, far exceeds that of SK hynix (000660.KS) and Micron.
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