South Korea To Consider Setting Up US$3.1b Foundry To Grow Local Chip Sector

Economic

Summary:

South Korea is considering building a 4.5 trillion won (US$3.06 billion or RM12.6 billion) foundry to manufacture chips, funded by state and private investment, the industry ministry said, amid efforts to ensure the country remains a powerhouse in semiconductors.

President Lee Jae Myung presided over a meeting on Wednesday attended by executives from chipmakers, including Samsung Electronics and SK Hynix, as well as policymakers and experts to lay out plans to maintain the country's lead in memory chips, strengthen the foundry business and expand fabless chip design in the AI era.

"South Korea needs to take a new leap forward, and... the semiconductor sector is an area where we are very competitive," Lee said.

South Korea will consider setting up a 12-inch, 40-nanometre foundry jointly backed by the public and private sectors to help fabless firms develop and test chips, the industry ministry said in a statement.

South Korea will also seek to locally produce defence-related semiconductors, given that the sector relies on imports for 99% of its supplies, the ministry said.

The government will consider putting in a provision for the priority purchase of domestic semiconductors in national security infrastructure in a related law, it said.

A special committee on semiconductors will be established under President Lee to act as the control centre for national policies on chips, the statement said.

Source: Theedgemarkets

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Gerik

Economic

Commodity

Historic Milestone Fueled by Policy Expectations

Silver prices continued their historic ascent this week, breaching the psychologically significant $60 level for the first time and peaking at $61.4797 per ounce in Wednesday's session. This rally is largely tied to investor speculation that the Federal Reserve will begin easing monetary policy by cutting interest rates by 25 basis points at the close of its December 9–10 meeting. The anticipated policy shift, if confirmed, would reduce the opportunity cost of holding non-yielding assets such as silver, a relationship that often triggers upward pressure on precious metal prices.

Fed policy outlook has become a major catalyst for speculative flows, especially as President Trump’s frontrunner for Fed chair, Kevin Hassett, publicly supported substantial rate reductions, signaling dovish leadership ahead. The link between lower rates and increased silver demand suggests a causal relationship between monetary policy expectations and short-term asset allocation shifts, especially within speculative retail segments.

Speculative Momentum Amplifies Price Surge

According to David Wilson of BNP Paribas, silver’s retail-driven investor base has played a crucial role in amplifying the current rally. Once price momentum took hold particularly following October’s short squeeze and persistent supply issues new inflows began compounding the gains. This behavior aligns with a positive feedback loop typical in speculative markets, where rising prices attract further investment, reinforcing the trend.

Evidence of this is visible in the spike in call options activity tied to the largest silver-backed exchange-traded funds (ETFs), echoing volumes last seen during the October squeeze. Last week alone, ETF inflows were the highest since July, suggesting that investors are not only reacting to price action but also positioning themselves for continued upside.

Supply Constraints Remain Despite Easing Crunch

While the acute supply crisis that emerged in October has subsided somewhat, structural tightness in the silver market persists. Borrowing rates for silver remain elevated, indicating that metal availability is still constrained. Chinese silver inventories, in particular, are at decade lows, highlighting regional supply-demand imbalances. These shortages are not merely correlative to the rally but represent a fundamental constraint that directly influences price dynamics by limiting physical delivery capacity, particularly for industrial users and bullion banks.

In London, where vault inventories have recovered slightly, the tightness is still evident in lease rates, suggesting that underlying supply issues continue to exert upward pressure on the market. Meanwhile, in the US, Comex inventories remain historically high but have stopped growing, as some domestic silver remains withheld from export due to regulatory uncertainty.

Tariff Concerns Add a New Layer of Uncertainty

Investor anxiety over a possible tariff on silver imports is adding a new dimension to the rally. The metal’s inclusion last month in the US government’s list of “critical minerals” has raised speculation that new trade restrictions may follow. While no tariffs have been announced, the anticipation has caused some US-based inventories to remain onshore, tightening global supply and potentially influencing Comex positioning.

This anticipatory behavior reveals a forward-looking risk premium being priced into the market, as traders factor in regulatory developments that could disrupt transnational supply chains.

Silver Versus Gold and Other Precious Metals

Silver’s year-to-date gain of over 100% now vastly outpaces gold’s 60% increase, further emphasizing the white metal’s outperformance. While gold remains a traditional safe-haven asset, silver’s dual role as an industrial metal and speculative instrument gives it higher sensitivity to macro shifts, such as interest rates, manufacturing demand, and ETF flows. In contrast, platinum and palladium have trended lower, likely due to softer demand in the automotive sector and limited investor enthusiasm compared to the silver narrative.

As of 11:19 a.m. Singapore time, silver was trading at $61.0108 an ounce, up 0.6%. Gold rose slightly to $4,209.62 per ounce, while the Bloomberg Dollar Spot Index was unchanged, indicating that dollar strength was not a significant driver in Wednesday’s session.

Silver’s break past $60 signals more than just speculative froth; it reflects a convergence of macroeconomic policy expectations, persistent physical tightness, and regulatory uncertainty. While a correction may seem overdue given the metal’s 20% surge in just three weeks, the strength of investor sentiment and structural factors could sustain elevated levels. As attention shifts to the Fed’s policy decision and potential trade announcements, silver’s path forward will likely remain volatile but highly active, with $100 no longer dismissed as an extreme projection by market participants.

Source: Reuters

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Olivia Brooks

Stocks

Economic

European stocks are expected to open in negative territory on Wednesday as global investors gear up for the U.S. Federal Reserve's interest rate decision.

The U.K.'s FTSE index is seen opening 0.34% lower, Germany's DAX down 0.24%, France's CAC 40 down 0.25% and Italy's FTSE MIB down 0.3%, according to data from IG.

Global markets are awaiting the outcome of the Fed's final meeting of the year on Wednesday.

The central bank is widely expected to deliver its third straight interest rate cut of a quarter percentage point, with Fed Funds futures suggesting an 87.6% chance of a decrease, according to CME's FedWatch tool.

Sentiment among members of the rate-setting Federal Open Market Committee remains divided, however, as some favor cuts to stave off further labor market weakness and others believe another cut could worsen inflation.

Investors are looking to gauge members' sentiment from the post-meeting statement and Chair Jerome Powell's highly anticipated news conference on Wednesday afternoon.

European market sentiment is likely to have taken a hit this week after U.S. President Donald Trump criticized regional leaders this week, describing them as "weak" in an interview with Politico that was published Tuesday.

Trump, who has a checkered relationship with European leaders, appearing to get on well with some — such as the U.K.'s Keir Starmer and Italian PM Giorgia Meloni — and not so much with others. In the interview, the president criticized "decaying" Europe for failing to control migration or take action on the Ukraine war.

"I think they don't know what to do," he said in the interview, adding: "Europe doesn't know what to do."

The comments will hit hard at a time when European allies are trying to make sure the continent's voice is heard in negotiations over Ukraine peace proposals. They come after Trump's new national security strategy last week questioned whether European countries can "remain reliable allies."

Earnings come from TUI on Wednesday, and data releases include Italian industrial production figures.

Source: CNBC

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Gerik

Political

Strategic Patrol Increases Pressure on Japan’s Air Defense Posture

Japan’s Ministry of Defense reported that its fighter jets were scrambled to monitor a coordinated Russian-Chinese air patrol on Tuesday, marking a significant escalation in military activity near its borders. The operation involved two Russian Tu-95 nuclear-capable bombers flying from the Sea of Japan toward the East China Sea, where they joined two Chinese H-6 bombers for a long-range joint flight through the Pacific.

This joint mission, which lasted approximately eight hours according to Russian sources, extended across international airspace between Okinawa and Miyako islands a strategically critical zone that connects the East China Sea and Western Pacific. The patrol included a total of eight aircraft: four Chinese J-16 fighter escorts, two Tu-95s, and two H-6s, complemented by additional Russian aircraft operating simultaneously in the Sea of Japan, including an A-50 early warning plane and Su-30 fighters.

Japan and South Korea Respond as Security Concerns RiseJapanese Defense Minister Shinjiro Koizumi responded sharply on X (formerly Twitter), stating the operation was "clearly intended as a show of force against our nation" and emphasizing it poses "a serious concern for our national security." Japan's air defense forces reportedly executed all necessary airspace identification and tracking protocols to maintain territorial awareness.

Simultaneously, South Korea’s military also detected nine Russian and Chinese aircraft entering its air defense identification zone (ADIZ), though no airspace violations were reported. This multi-theater patrol signifies a rising level of coordination between Moscow and Beijing, which appears calibrated to project power and disrupt regional deterrence frameworks maintained by Tokyo and Seoul.

Tensions with China Worsen Following Taiwan RemarksThe timing of the patrol coincides with a noticeable uptick in hostile air encounters. Just days before, Japan accused Chinese carrier-based fighter jets of locking radar on Japanese military aircraft, an allegation China denied. This incident occurred shortly after Japanese Prime Minister Sanae Takaichi publicly stated that Japan might respond if a Chinese attack on Taiwan endangered Japanese security interests.

Beijing’s rapid military activities near Japanese airspace following those remarks suggest not only a correlation but a possible reactionary maneuver. However, it remains unclear whether this joint patrol was pre-planned or adjusted in response to diplomatic events. The current pattern of military signaling points toward increased pressure on Japan's strategic position in East Asia.

Expanding Sino-Russian Military Cooperation Beyond Symbolism

While joint air patrols between China and Russia have occurred intermittently since 2019, the scale and coordination of this recent exercise suggest a deeper, more operational partnership. The presence of nuclear-capable bombers in a patrol format, combined with electronic warfare and air superiority support, signals that both powers are seeking to refine joint force projection capabilities. In addition to this flight, the two countries have conducted naval exercises in the South China Sea and joint missile defense drills in Russia marking a trend toward broader interoperability across military domains.

This level of cooperation increasingly resembles a counterweight to the security frameworks of US allies in the region, including Japan, South Korea, and Taiwan. The nature of these joint operations long-range, multi-platform, and conducted in contested areas suggests preparation for potential future scenarios involving deterrence or coercive diplomacy.

Implications for Japan’s National Security and Diplomatic Strategy

For Japan, this development adds urgency to its evolving defense strategy, which already includes military modernization, increased defense spending, and closer alignment with the United States. The coordinated Chinese-Russian patrol further amplifies regional security concerns, particularly as Japan adjusts its Indo-Pacific security partnerships and takes a more vocal stance on cross-strait tensions.

The incident is also likely to reinforce Tokyo’s commitment to integrated air and missile defense systems and justify expanded investment in counter-strike capabilities. Meanwhile, the visual demonstration of Russia and China operating in lockstep near Japanese airspace is likely designed to test Japan’s strategic threshold and political resolve in the context of rising US-China competition.

The joint Russian-Chinese bomber patrol near Japan signals a calculated show of military unity aimed at challenging the status quo in East Asia. As Japan reacts to what it sees as coercive gestures targeting its sovereignty and its Taiwan policy, the regional security balance appears increasingly fragile. This aerial operation not only underscores the growing strategic intimacy between Beijing and Moscow but also sets the stage for more frequent and sophisticated military coordination in contested skies around Japan.

Source: Reuters

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Gerik

Economic

Shifting Trade Dynamics and Strategic Realignments

Vietnam is witnessing a surge of Chinese economic activity across investment, trade, and consumer sectors, propelled by strategic recalibration in response to US tariffs. Chinese firms are now the leading source of foreign investment in Vietnam, having pledged over $6.7 billion between January and November 2025, surpassing all other countries. This wave of capital inflow not only reflects a response to US trade barriers but also signals a longer-term realignment as Vietnam becomes more embedded within China’s regional economic strategy.

Despite past political tensions, including the 1979 war and ongoing maritime disputes, the two Communist neighbors have grown closer economically. Notable developments include Vietnam's recent approval of Huawei and ZTE contracts, Chinese loans for railway infrastructure, and the clearance of COMAC aircraft for Vietnamese airlines moves Hanoi had previously resisted due to national security concerns. These decisions reveal a pragmatic shift in Vietnam’s external relations, aiming to diversify economic ties and balance commitments made during trade talks with Washington.

Record Imports Underscore Growing Interdependence

Vietnamese imports from China reached approximately $168 billion through November 2025, marking a nearly 30% increase from 2024 and setting a new annual record. Nearly one-third of these imports consist of electronic components, many of which are re-exported in final goods destined for the United States. This pattern highlights Vietnam’s evolving role as both a manufacturing hub and a vital node in China’s export network.

However, this increase is not confined to intermediate goods. Vietnamese imports of Chinese consumer products, including food and automobiles, have also risen sharply. This trend points to an expanding Chinese presence in Vietnam's domestic market, driven in part by reduced anti-China sentiment among younger consumers and Beijing’s growing emphasis on Southeast Asia as a growth destination.

Chinese Brands Compete on Vietnam’s Consumer Front

In the electric vehicle (EV) sector, Chinese companies are making rapid inroads. Yadea, a prominent e-scooter manufacturer, sold over 36,000 units in Vietnam in the first ten months of 2025, establishing itself as the second-largest player behind domestic giant VinFast. The company is gaining market share as Vietnam accelerates its transition away from petrol-powered vehicles. Similarly, BYD is expanding its network of EV dealerships and charging infrastructure, although its sales remain undisclosed.

Chinese retail and tech companies are also expanding aggressively. CBRE reported in August that Chinese consumer brands, such as KKV, have become more visible in cities like Ho Chi Minh City and Hanoi. Platforms like TikTok (owned by ByteDance) have emerged as dominant forces in Vietnam’s social commerce ecosystem, while e-commerce giants Lazada (Alibaba-backed), Shopee, and Tiki all feature investments linked to major Chinese tech players, including Tencent.

Technology Transfers and Joint Ventures Signal Long-Term Intent

A notable development is the rise of Chinese-Vietnamese joint ventures involving technology transfer an area traditionally limited in China's overseas investment strategy. Steve Bui, chairman of the Vietnam China Business Council, reported that 12 Chinese council members have either initiated or committed to transferring technology to Vietnamese partners in 2025, compared to none in the previous year. This shift reflects a move toward deeper, long-term integration rather than simple tariff avoidance.

Among these projects is a joint factory in northern Vietnam between CNTE (supported by battery giant CATL) and local partner Delta E&C. The factory will produce battery energy storage systems with a planned export volume of 250 containers annually starting in late 2026. CNTE is currently providing technical support for the project, further underscoring China’s intention to embed itself into Vietnam’s clean energy supply chain.

Transformation of Vietnam’s Industrial Landscape

Chinese companies now account for a quarter of tenants at the DEEP C industrial park in northern Vietnam, up from 10% in 2019. This rapid growth illustrates the shift from tactical relocation due to US tariffs to a broader strategy combining risk mitigation with market expansion. As Dan Martin from Dezan Shira notes, the scale and scope of these projects are fundamentally reshaping Vietnam’s industrial ecosystem.

This evolution in Chinese investment from labor-intensive manufacturing to technology-driven ventures marks a turning point. Vietnam is no longer seen merely as a low-cost assembly site but as a strategic partner in China's global value chain. The ongoing increase in capital, know-how, and consumer-focused projects indicates a maturing relationship.

Geopolitical Implications and the Risk of Over-Alignment

Vietnam’s closer economic engagement with China raises questions about its long-term foreign policy orientation. While Hanoi continues to cultivate ties with Washington and other Western partners, recent overtures to Beijing may test its ability to maintain diplomatic balance. Security analysts like Alexander Vuving warn that Vietnam risks transitioning from a flexible “swing state” into a “torn country” if it overcommits to either bloc. This could undermine its strategic autonomy in a region increasingly shaped by great power rivalry.

China’s growing economic footprint in Vietnam, underpinned by record trade volumes, rising consumer penetration, and long-term technology partnerships, illustrates a significant shift in regional trade patterns. Accelerated by US tariffs and geopolitical competition, this shift is transforming Vietnam into a cornerstone of China's Southeast Asian economic strategy. As the country navigates between global powers, its success will depend on maintaining a delicate balance between integration, independence, and strategic diversification.

Source: Reuters

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Justin

Political

Economic

Southeast Asian Games - Opening Ceremony - Rajamangala National Stadium, Bangkok, Thailand - December 9, 2025 Synchronised drones form the 33rd SEA Games Thailand 2025 emblem during the opening ceremony REUTERS/Patipat Janthong

Cambodia on Wednesday withdrew its team from the Southeast Asian Games in Thailand for safety reasons, as a border conflict between the two neighbours raged for a third day.

In a letter to organisers, the National Olympic Committee of Cambodia said it made the decision due to "serious concerns" and requests from families of athletes to allow them to return home.

Fighting erupted between Thailand and Cambodia on Monday, the second major flare-up between them this year, derailing a fragile truce brokered in July by U.S. President Donald Trump.

Hundreds of thousands of people have been displaced by heavy exchanges of artillery from both sides and air strikes by Thai fighter jets. Officials say least 14 people have been killed and 88 injured in this week's clashes.

"NOCC must withdraw all of our delegation and arrange for their prompt return to Cambodia for safety reasons," the committee said in the letter, dated December 10 and released on Wednesday, a day after the team attended the opening ceremony of the Games in Bangkok.

"The decision was not made lightly," it said.

Cambodia was ranked fourth in the medals table when it hosted the last Games in 2023. This year's edition is being contested in Bangkok, Chonburi and Songkhla.

Source: Reuters

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Samantha Luan

Forex

Commodity

The Australian state of Victoria is going ahead with its first petroleum exploration tenders in seven years in an attempt to head off looming gas supply risks as production from existing fields declines.

The tenders cover blocks in the Otway and Gippsland basins, with bids due Feb. 11, the Victorian government said in a statement. These areas have the most industry interest for exploration, it said.

The new projects will supply the domestic market, rather than being for export, and are part of a drive to meet rising electricity demand in the states of New South Wales, Victoria and South Australia.

Demand for the fossil fuel on the country's populous east coast is expected to exceed supply from 2028, the Australian Energy Market Operator forecast earlier this year. That has led to calls to force liquefied natural gas exporters to help meet the shortfall by diverting non-contracted supply to the domestic market.

Developing new gas projects has spurred a backlash from environmental groups, who are worried about the climate impact, as well as seismic blasting, marine ecosystem damage and groundwater drawdown. Indigenous land owners have also legally challenged a project in New South Wales. Australia has pledged to cut greenhouse gases between 62% and 70% from 2005 levels by 2035, a goal it's in danger of missing.

"Any new fossil fuel projects would undermine Victoria's climate targets and the imperative to transition off gas," Environment Victoria said in a statement.

Australian Energy Producers' Victoria Director Peter Kos said the decision was "an essential first step in unlocking new domestic natural gas resources." Around one-third of the state's manufacturing energy needs are met by gas, according to the AEP.