[Asia Economy Reporter Hyungsoo Park] Semiconductor and rare earth-related stocks are strong in the domestic stock market. The news that U.S. President Joe Biden signed an executive order to review the supply chains of key items such as semiconductors, rare earths, and batteries, emphasizing cooperation with allies, appears to have influenced investor sentiment.
As of 10:32 a.m. on the 25th, Senotec is trading at 2,590 KRW, up 26.34% from the previous day. Jeju Semiconductor is also rising more than 7%.
Industry insiders interpret that although President Biden did not directly mention China, the executive order reflects the intention to protect the U.S. industrial base by forming alliances with allied countries, considering the possibility of supply chain blockades by China.
On the 24th (local time), President Biden signed an executive order at the White House to review supply chains. The order includes analyzing the supply chains of semiconductors, electric vehicle batteries, rare earths, and medical supplies over the next 100 days, followed by expanding the scope to defense, health, energy, and transportation sectors.
Japanese foreign media interpreted President Biden’s executive order as a strategy to strengthen the major parts supply alliance among U.S. and Asian allies such as South Korea, Japan, and Taiwan, aiming to isolate China.
As a result of the executive order, the U.S. is expected to increase imports of semiconductors from South Korea, Taiwan, and Japan, and batteries and pharmaceuticals from South Korea and Japan. Rare earth imports are also expected to shift from China to Australia and other Asian countries. Currently, the U.S. imports about 80% of its rare earth usage from China.
Oh Kang-ho, a researcher at Shinhan Financial Investment, analyzed, "Semiconductor prices are rebounding," adding, "This is a phase where demand recovery is occurring amid a supply-constrained environment." He further noted, "When semiconductor prices rise, product unit prices also increase," and "The growing demand for automotive memory semiconductors is also a positive factor."
He emphasized, "The amount of semiconductors installed inevitably increases with autonomous driving and expanded functions," and added, "Attention should be paid not only to high-performance, high-spec semiconductor products but also to the expansion of low-power semiconductor product groups."
Researcher Oh explained, "We are expanding the portfolio of low-power semiconductor products used in connected E-Call and infotainment," and "Sales to domestic and overseas automakers are expected to increase."
Additionally, he predicted, "We have also succeeded in certifying memory products for Qualcomm 5G modems," and "Semiconductor sales will increase in 2021 with the opening of the 5G and automotive electronics markets."
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