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- Why Is HS Hyosung Selling Its Tire Steel Cord Business? Cho Hyun-sang Bets on Carbon Fiber and Anode Materials
- Cho Hyun-sang, Vice Chairman of HS Hyosung, is moving forward with the sale of the tire steel cord division, a key business of the group's core subsidiary, HS Hyosung Advanced Materials.
The decision to sell this highly profitable business, which accounts for 40% of HS Hyosung Advanced Materials' operating profit and holds the No. 1 global market share, is seen as Vice Chairman Cho's strong commitment to expanding the group's scale through a new business portfolio.
Vice Chairman Cho plans to sell the tire steel cord business for approximately KRW 1.5 trillion (US$ 1.08 billion) and raise additional funds to significantly increase investment in future industries with high growth potential, such as carbon fiber, anode materials for secondary batteries, and artificial intelligence (AI).
An HS Hyosung Advanced Materials representative stated on March 14, "We plan to invest about KRW 1 trillion (US$ 721 million) in the Jeonju plant and other facilities for the carbon fiber business by 2028."
HS Hyosung Advanced Materials is the only carbon fiber producer in Korea, manufacturing products at its Jeonju plant. Its biggest competitor is Japan's Toray.
Toray holds a 40% share of the global carbon fiber market, ranking first, while HS Hyosung Advanced Materials' share is around 3%.
According to market research firm Markets and Markets, the global carbon fiber market is projected to grow from US$ 6.5 billion (KRW 9.4 trillion) in 2022 to US$ 11.9 billion (KRW 17.3 trillion) in 2027 and US$ 21.7 billion (KRW 31.5 trillion) in 2032.
Carbon fiber is a fiber containing more than 92% carbon in its yarn, making it four times lighter than steel but ten times stronger and seven times more elastic, earning it the reputation of a "dream material."
Although its high production cost currently limits its applications compared to steel, its use is expected to expand across various industries, including automobiles, shipbuilding, aerospace, civil engineering, construction, defense, and energy.
To expand its carbon fiber business, HS Hyosung Advanced Materials is also constructing a carbon fiber plant in Vietnam. Three carbon fiber production bases in Vietnam will begin operations sequentially starting this year.
An HS Hyosung representative stated, "We plan to increase the annual production capacity of the Jeonju plant, our main carbon fiber facility, from the current 9,000 tons to 24,000 tons by 2028 with a KRW 1 trillion (US$ 721 million) investment," adding, "Since late 2022, the Jeonju plant has been producing 'T1000,' an ultra-high-strength carbon fiber used in aircraft fuselages."
This decision to divest the tire steel cord business is interpreted as a bold move to secure investment for the promising future carbon fiber sector.
The tire steel cord business is a core division that accounted for about 50% of HS Hyosung Advanced Materials' operating profit last year. The company holds a dominant 50% share of the global tire steel cord market.
HS Hyosung Advanced Materials has been working on the sale of its tire steel cord business since November last year and appointed Samjong KPMG as its lead advisor on March 12. The company reportedly expects the sale price to be around KRW 1.5 trillion (US$ 1.08 billion).
Of the sale proceeds, KRW 1 trillion (US$ 721 million) will be invested in expanding the carbon fiber business, while the remaining funds will be used for other new business ventures and reducing the company's debt ratio.
Lee Dong-wook, a researcher at IBK Investment & Securities, stated, "HS Hyosung Advanced Materials is reviewing strategies for improving its financial structure and pursuing new business initiatives through the sale of its tire steel cord business."
An HS Hyosung representative added, "The group is exploring various business models and opportunities in areas such as next-generation lightweight composite materials for future mobility, AI and data management, new materials for secondary batteries, and eco-friendly materials."
The second new business HS Hyosung Group is focusing on is secondary battery materials. In October last year, HS Hyosung Advanced Materials invested KRW 44.8 billion (US$ 32.3 million) in Umicore, the world's second-largest battery cathode material company based in Belgium.
The company plans to actively grow its business in silicon anode materials developed by Umicore. While graphite is currently the primary anode material for batteries, China dominates the graphite supply chain, making silicon an alternative material of interest.
The group is also pursuing the development of enterprise AI systems. Currently, Hyosung Information Systems (HIS) is developing AI systems for business-to-business (B2B) applications.
Born in 1971, Vice Chairman Cho graduated from Brown University with a degree in economics. As the largest shareholder and Vice Chairman of HS Hyosung, he leads HS Hyosung Group, which was established on July 1, 2024.
HS Hyosung Group's subsidiaries include HS Hyosung Advanced Materials, Hyosung Information Systems, Hyosung Holdings USA, Hyosung Toyota, Gwangju Ilbo, and Vina Logistics Corporation.
#HSHyosung #ChoHyunsang #carbonfiber #tiresteelcord #secondarybattery #AI #investment #businessstrategy #HyosungInformationSystems #futuremobility
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- Shinhan Financial Group’s Model Succession Structure: Who Is Being Prepared to Succeed Jin Ok-dong?
- Jin Ok-dong, Chairman of Shinhan Financial Group, is in the final year of his term.
His term ends in March 2026, at which time he will be 65 years old. Despite Shinhan Financial Group's strict age limit for the chairman, he will still be eligible for reappointment.
The chairman of Shinhan Financial Group can serve until the age of 70, similar to other financial groups like Hana Financial Group and KB Financial Group.
However, unlike other financial groups, Shinhan Financial Group has an additional rule that prohibits the appointment of a chairman if the candidate is over 67 years old at the time of appointment.
Barring any unexpected developments, Chairman Jin is expected to seek reappointment. The Zainichi Koreans, who hold significant influence within Shinhan Financial Group, are also firmly supporting Chairman Jin.
Chairman Jin appears to be focusing on Shinhan Financial Group's long-term future without being pressured by short-term performance demands due to the stress of reappointment. This was particularly evident during the reshuffling of affiliate CEOs at the end of last year.
◆ The appeal of Park Chang-hoon, the newly appointed CEO of Shinhan Card
Moon Dong-kwon, the former CEO of Shinhan Card, demonstrated stable management skills while leading the company. However, he could not avoid Chairman Jin's drive for reform.
Until the third quarter of 2024, Moon had achieved a net profit of KRW 552.7 billion (US$ 398.4 million), a 17.8% increase from the same period last year. While the gap with Samsung Card (KRW 531.5 billion, US$ 383.1 million) was not large, Moon was still seen as a strong candidate for reappointment as he maintained the top position in the industry.
However, defying expectations, Park Chang-hoon, who was then the head of a division at Shinhan Card, was appointed as the new CEO of Shinhan Card.
The interpretation is that Chairman Jin judged Park to be better suited to transform Shinhan Card into a platform company amid increasing challenges in maintaining the top position.
Park has led Shinhan Card’s big data and payment divisions. Recently, he has been responsible for three major new data- and digital-based businesses, positioning Shinhan Card to grow as a platform company.
The reason for Moon Dong-kwon's replacement became clear when Shinhan Card lost its top industry position to Samsung Card in the 2024 annual performance results.
Shinhan Card recorded a net profit of KRW 572.1 billion (US$ 412.4 million) in 2024, down 7.8% from the previous year. In the fourth quarter of 2024 alone, Shinhan Card posted a net profit of KRW 19.4 billion (US$ 14.0 million). This decline was attributed to increased one-time costs from early retirements and corporate taxes.
In contrast, Samsung Card achieved a net profit of KRW 664.6 billion (US$ 479.1 million). It posted a net profit of KRW 133.1 billion (US$ 96.0 million) in the fourth quarter of 2024, widening the gap with Shinhan Card by over KRW 100 billion (US$ 72.1 million) and reclaiming the top spot in the industry.
However, some observers believe that Park's appointment has weakened the pool of candidates for the next chairman.
The CEO of Shinhan Card, along with the CEO of Shinhan Bank, is typically considered a strong contender for Shinhan Financial Group’s chairman shortlist. With less than a year left before the next chairman recommendation, it is seen as difficult to include a newly appointed CEO in the list of chairman candidates.
Chairman Jin replaced nine affiliate CEOs, selecting five from division head positions. In addition to Park Chang-hoon, the other appointees from division head positions include Chae Soo-woong, CEO of Shinhan Savings Bank; Min Bok-ki, CEO of Shinhan DS; Kim Jung-nam, CEO of Shinhan Fund Partners; and Im Hyun-woo, CEO of Shinhan REITs Management.
This rise of division head-level executives is interpreted as Chairman Jin's intention to actively appoint the next generation of leaders and achieve generational change.
◆ Shinhan Bank CEO Jeong Sang-hyuk solidifies his position
While the rise of division head-level executives has somewhat weakened the weight of Shinhan Financial Group’s chairman candidates, Jeong Sang-hyuk, CEO of Shinhan Bank, has been solidifying his position.
After the internal conflict over succession known as the "Shinhan incident," Shinhan Financial Group’s hierarchy involving Shinhan Bank, Shinhan Card, and Shinhan Life has effectively been established.
Although an unexpected figure like Chairman Jin Ok-dong could emerge as the CEO of Shinhan Bank, it is now considered a given that the CEO of Shinhan Bank will eventually become the next chairman.
Chairman Jin’s appointment as chairman in 2022 surprised the industry. However, this was because the previous chairman, who was strongly expected to serve a third term, suddenly resigned during the interview process. Jin’s appointment itself was not seen as a shock to the industry.
Jeong Sang-hyuk, the current CEO of Shinhan Bank, is also being mentioned as a candidate for the next chairman. Jeong was the only CEO among the heads of the five major banks to retain his position despite the wave of generational change that swept through the financial industry at the end of last year.
In addition to being reappointed, Jeong received an unprecedented two-year term guarantee, breaking the usual industry practice of granting only a one-year extension for bank CEOs.
This exceptional treatment is interpreted as a sign of Chairman Jin’s strong trust in Jeong.
Jeong has led balanced growth in both Shinhan Bank’s interest and non-interest income, achieving a record net profit of KRW 3.6954 trillion (US$ 2.664 billion).
Moreover, he introduced the financial industry's first internal control responsibility structure, successfully balancing internal control and management stability.
Jeong’s management and internal control capabilities have also yielded visible results, as Shinhan Bank reclaimed its position as the leading bank. This marks the first time in six years since Shinhan Bank posted a net profit of KRW 2.279 trillion (US$ 1.643 billion) in 2018, surpassing KB Kookmin Bank’s KRW 2.2592 trillion (US$ 1.629 billion) by a narrow margin.
This has led to speculation that the succession structure within Shinhan Financial Group has been solidified.
Even if Chairman Jin fails to secure reappointment after completing his term in one year, Shinhan Financial Group could avoid a leadership vacuum if Jeong’s term as a non-executive director at Shinhan Financial Group remains in effect.
Jeong Sang-hyuk was born in 1964. He will be 61 years old as of March 2026, when the next chairman’s term begins. If Chairman Jin succeeds in securing reappointment, Jeong would be eligible to run for the chairman position in March 2029, when Chairman Jin reaches the age limit.
If Jeong becomes the chairman of Shinhan Financial Group in March 2029, when he will be 64 years old, he would be eligible for up to two consecutive terms.
#ShinhanFinancialGroup #JinOkdong #ShinhanCard #ParkChanghoon #JeongSanghyuk #ShinhanBank #SamsungCard #financialindustry #leadership #CEOappointments
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- HLB's Expansion: Strategic Growth or Fundraising? Jin Yang-gon’s Multiple Directorships Spark Controversy
- Jin Yang-gon, Chairman of HLB Group, is continuing his aggressive mergers and acquisitions (M&A) strategy this year to establish a comprehensive biotechnology ecosystem for the group.
HLB Group’s drug development system, "HBS," which Chairman Jin has emphasized, is designed to integrate the core capabilities of each affiliate—research and development, production, regulatory compliance, approvals, and marketing—to create synergy. However, as he continues to acquire companies and joins their boards of directors, concerns are growing about whether his extensive concurrent positions in ten companies could undermine his duty of diligence.
According to the Electronic Disclosure System on March 13, Chairman Jin is set to be newly appointed as an inside director of AnyGen, a peptide-based biotechnology company. With this, the number of affiliates where he serves as an inside director has now reached ten.
Currently, among HLB Group’s 11 listed companies, Jin holds an inside director position in all except HLB Therapeutics. His directorships now include HLB, HLB Life Science, HLB Pharmaceutical, HLB Global, HLB Science, HLB Biostep, HLB PanaGen, HLB Innovation, HLB Genex, and now AnyGen.
HLB Group has been strengthening its control over newly acquired companies by appointing Chairman Jin and other key HLB officials to their boards of directors. HLB Genex (formerly Genofocus) was acquired by HLB Group in October 2024, and by December of the same year, four new inside directors, including Jin, were appointed. A similar pattern is emerging with AnyGen.
Of course, as the overall leader of the group, it is crucial for Jin to set the strategic direction for newly acquired companies as part of their initial board composition. However, questions remain about whether he can effectively participate in the decision-making process of ten different boards.
The issue of excessive concurrent executive roles among major corporate leaders has long been controversial. Lotte Group Chairman Shin Dong-bin faced scrutiny for holding multiple inside director positions, including at Lotte Holdings, Lotte Chemical, and Lotte Wellfood. Similarly, Hanwha Group Vice Chairman Kim Dong-kwan’s concurrent leadership in four companies raised concerns about his ability to dedicate sufficient time to each board.
Jin has so far maintained a board meeting attendance rate of over 90% at eight of his affiliated companies. His attendance records show 100% for HLB (as of Q3 2024), 100% for HLB PanaGen (as of H1 2024), 100% for HLB Biostep (as of H1 2024), 95% for HLB Global (as of Q3 2024), 95% for HLB Innovation (as of the full year 2024), 93% for HLB Life Science (as of Q3 2024), 90% for HLB Pharmaceutical (as of Q3 2024), and 67% for HLB Science (as of the full year 2023).
However, with the addition of HLB Genex and AnyGen this year—and the possibility of further acquisitions—concerns about the effectiveness of his participation in board activities are expected to grow.
Moreover, Jin’s entry as an inside director at newly acquired affiliates is also closely tied to financing. HLB Group has been using multiple subsidiaries to raise funds for acquisitions. In the case of the AnyGen acquisition, seven HLB Group affiliates (HLB, HLB Genex, HLB Life Science, HLB Biostep, HLB PanaGen, HLB Investment, and Koas) were mobilized.
Notably, HLB Genex was brought in for the AnyGen acquisition less than six months after it was acquired by HLB Group. During the HLB Genex acquisition, seven affiliates were also used to raise funds. This has led to speculation that Jin’s acquisitions may be primarily aimed at financing further acquisitions.
HLB has repeatedly conducted shareholder-allotted capital increases to secure acquisition funds. While the company claims this structure helps distribute risks within the group, the repeated capital raises have ultimately benefited Jin’s financial interests.
While Jin argues that the acquisitions are necessary for HLB’s growth, concerns persist that HLB Group could end up accumulating financially weak companies, especially as its key cancer drug, Rivoceranib, has yet to deliver meaningful results.
Most of the companies acquired by HLB continue to operate at a loss. According to 2024 consolidated financial results for the group’s listed affiliates, HLB Life Science reported an operating loss of KRW 24.4 billion (US$ 17.6 million), HLB Global posted an operating loss of KRW 3.6 billion (US$ 2.6 million), HLB Biostep recorded an operating loss of KRW 12.9 billion (US$ 9.3 million), HLB PanaGen had an operating loss of KRW 1.3 billion (US$ 0.9 million), and HLB Innovation reported an operating loss of KRW 11.8 billion (US$ 8.5 million). As of Q3 2024, HLB Genex reported an operating loss of KRW 400 million (US$ 288,400), while AnyGen recorded an operating loss of KRW 4.1 billion (US$ 3 million).
HLB itself has been in the red for 11 consecutive years, with its last operating profit recorded in 2014 at KRW 360 million (US$ 259,500). For 2024, HLB posted a consolidated operating loss of KRW 118.8 billion (US$ 85.7 million), narrowing its deficit by about KRW 6.2 billion (US$ 4.5 million) compared to 2023.
With continued losses, HLB’s stock price has also declined. On March 14, 2024, HLB’s share price stood at KRW 97,000, but as of the March 12, 2025 closing price, it had fallen to KRW 78,500, a 19% drop. Its market capitalization also shrank from KRW 12.69 trillion (US$ 9.15 billion) to KRW 10.31 trillion (US$ 7.43 billion), erasing KRW 2.37 trillion (US$ 1.71 billion) in value.
For HLB Group’s drug development system to function as designed, the group’s core drug candidates must successfully complete clinical trials and reach commercialization. However, the targeted anticancer drug Rivoceranib, which marks the beginning of HLB Group’s drug development efforts, has yet to show tangible results.
Jin has insisted on independently developing Rivoceranib rather than licensing it out, aiming to ensure that all profits remain within HLB Group. However, as commercialization continues to be delayed, the financial burden on the group is mounting.
Within the next 20 days, the U.S. Food and Drug Administration (FDA) is expected to notify HLB of its decision on Rivoceranib’s new drug application. HLB stated on its official blog, “We will immediately announce the FDA’s decision on YouTube once we receive it,” urging investors “not to be swayed by malicious rumors.”
#HLB #JinYanggon #biotech #pharmaceuticals #M&A #Rivoceranib #FDAapproval #investment #stockmarket #corporategovernance
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- Kyeryong Construction Ramps Up Orders: Lee Seung-chan Aims to Reignite Public Sector Dominance
- Kyeryong Construction Industrial has been rapidly securing orders this year at a faster pace than last year. Even before the first quarter ends, the company is particularly excelling in public construction, a sector where it ranked first last year.
Chairman Lee Seung-chan of Kyeryong Construction Industrial is expected to leverage the company’s strengths in public construction to ignite a rebound in performance.
According to the Financial Supervisory Service's disclosure on March 13, Kyeryong Construction Industrial's total project orders, based on official filings, have reached KRW 435.6 billion (US$ 314.1 million) so far this year.
All of the company’s contracts secured this year have been public construction projects commissioned by the government, local governments, and public enterprises.
On March 11, Kyeryong Construction Industrial signed a contract with Korea Land & Housing Corporation (LH) for an apartment construction project in Sejong City. In February, it secured contracts with the Public Procurement Service, the Defense Acquisition Program Administration, and LH for apartment projects in Janghang, Goyang, Gyeonggi Province. In January, it signed a contract with Seoul Housing & Communities Corporation (SH) for a public housing project in Songpa.
Considering that Kyeryong Construction Industrial's first contract last year was signed in April for Coupang’s fulfillment center (FC) in Busan, the company's order acquisition speed this year has been exceptionally fast.
The company appears to be leveraging its strong track record in public construction, having previously undertaken major projects such as the Prime Minister’s Office at the Government Complex Sejong, the Bank of Korea's integrated annex, and facilities for the 2018 PyeongChang Winter Olympics.
Among construction firms, Kyeryong Construction Industrial was the top recipient of public construction contracts last year, securing KRW 1.59 trillion (US$ 1.15 billion) and narrowly surpassing DL E&C (KRW 1.57 trillion or US$ 1.13 billion).
At that time, Kyeryong Construction Industrial was regarded as having reclaimed its throne in public construction, having previously held the No. 1 position in new public construction orders for four consecutive years from 2016 to 2019.
Public construction projects typically have lower profitability compared to private sector contracts. However, since payments from public clients are more secure, such projects are considered a reliable way for construction companies, especially mid-sized firms, to stabilize their financial structure amid an industry downturn.
Moreover, expectations are rising as Minister of Land, Infrastructure, and Transport Park Sang-woo has expressed agreement on adjusting public construction costs to reflect rising material prices.
Chairman Lee Seung-chan is expected to continue improving the company's financial structure by rapidly expanding its order backlog this year.
According to financial statements submitted for the upcoming shareholders' meeting, Kyeryong Construction Industrial recorded consolidated revenue of KRW 3.17 trillion (US$ 2.29 billion) last year, a 6.4% increase from 2023, marking the company’s first time surpassing the KRW 3 trillion milestone.
However, operating profit declined by 17.7% due to rising costs, continuing a downward trend. Meanwhile, net profit increased by 4.9% due to a reduction in other non-operating expenses.
As of the end of last year, the debt ratio stood at 220%, improving from 231% at the end of September. Excluding subsidiaries, the company’s standalone debt ratio also improved from 166% in September to 145% by year-end.
Since these financial statements have not yet undergone external audits, they may be subject to change. However, as of now, Kyeryong Construction Industrial’s business outlook appears relatively positive.
Chairman Lee is striving to sustain the company’s growth momentum by setting this year’s order target at a level similar to last year’s record-breaking results.
At the company’s 55th-anniversary event in January, he announced a group-wide order target of KRW 6.4 trillion (US$ 4.61 billion), comparable to last year’s all-time high of KRW 6.52 trillion (US$ 4.70 billion).
Despite revenue growth, the ongoing pressure from rising costs has led to declining operating profits, prompting a stronger focus on profitability management.
Chairman Lee emphasized, “Kyeryong Construction Industrial has proactively diversified its portfolio and taken preemptive measures to address risks, successfully achieving record-high orders last year despite an uncertain business environment. However, the sharp increase in costs and the resulting low profitability remain harsh realities we must confront.”
Kyeryong Construction Industrial has maintained the same board structure as last year, prioritizing stability.
Chairman Lee Seung-chan has been re-nominated as an inside director. The eldest son of company founder Lee In-goo, Chairman Lee currently oversees overall management as an inside director rather than as a CEO.
CEO Yoon Gil-ho has also been re-nominated as an inside director. Since CEO Oh Tae-sik, Chairman Lee’s brother-in-law, remains in office, the company is expected to continue operating under a dual CEO system, with Chairman Lee overseeing management.
Additionally, Kyeryong Construction Industrial has re-nominated Han Seung-goo, a former CEO, as an inside director. Han stepped down as CEO in March 2023 to focus on his role as chairman of the Construction Association of Korea but has continued to serve as an inside director, providing management advice.
The company believes it is leveraging its extensive public construction track record to maintain its competitive edge.
Since public construction projects are commissioned by government agencies and public enterprises, firms with a well-established history and experience in the sector tend to have an advantage over competitors.
A Kyeryong Construction Industrial official stated, “Kyeryong Construction Industrial has traditionally demonstrated strong capabilities in public construction, accumulating experience and expertise in both public and private projects, including logistics centers and hospitals. With our extensive track record, we maintain a competitive edge over other construction firms.”
#KyeryongConstruction #publicConstruction #LeeSeungchan #constructionIndustry #governmentContracts #KoreaInfrastructure #buildingProjects #financialStability #orderBacklog #profitabilityManagement
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- Samsung Electronics Faces Foundry Spin-Off Dilemma: Will Lee Jae-yong Act in Time?
- Samsung Electronics is facing intense debate over whether to spin off its foundry business. As the company encounters a crisis in the semiconductor sector, various solutions are being discussed, and the idea of spinning off the foundry unit remains a key topic.
Regardless of the decision on the foundry business, the ultimate choice rests entirely with Samsung Electronics Chairman Lee Jae-yong. However, since the semiconductor industry has become a national issue, with discussions on a special semiconductor law taking place in the National Assembly, Chairman Lee must present both the rationale and vision behind his decision, whatever it may be.
Former Chairman Lee Kun-hee emphasized organizational flexibility and efficiency throughout his lifetime while warning against the bureaucratization of large corporations.
He stated, “Even as a large company, we must operate like a small business,” stressing that “smaller organizations can respond more swiftly to environmental changes and have greater agility.”
Lee Kun-hee’s philosophy became the foundation for Samsung Electronics to swiftly adapt to a rapidly changing business environment and continuously pursue innovation, allowing it to grow into a world-class company.
The foundry business involves contract manufacturing of semiconductors based on designs provided by fabless semiconductor companies, requiring both cutting-edge technology and massive investment.
While Samsung Electronics remains the undisputed global leader in memory semiconductors, it continues to struggle against Taiwan’s TSMC in the foundry sector.
When and how will Chairman Lee Jae-yong make a decision regarding the foundry spin-off? The real concern is not just the decision itself but the risk of missing the right timing.
◆ The Longstanding Dilemma of the Foundry Spin-Off
Because Samsung Electronics is a massive organization, often referred to as a "giant," some argue that spinning off the foundry business is necessary to enhance agility and establish an independent decision-making structure.
The foundry business, in particular, relies on quickly responding to customer demands and providing customized solutions, which are considered key competitive factors.
Critics argue that such agility is difficult to achieve within a large corporate structure, where complex decision-making processes can hinder competitiveness.
Additionally, as an integrated device manufacturer (IDM), Samsung Electronics operates in memory semiconductors, system semiconductors, and the foundry business simultaneously, leading to continuous concerns about potential conflicts of interest with prospective customers.
From the perspective of fabless semiconductor companies, entrusting their core technologies and designs to Samsung Electronics—a competitor and potential rival—raises concerns.
This stands in stark contrast to TSMC, which has dominated the foundry market by adhering to its philosophy of “not competing with customers.”
Park Sang-in, a professor at Seoul National University’s Graduate School of Public Administration and chairman of the Economic Justice Action Network’s (Gyeongsilryeon) Chaebol Reform Committee, expressed criticism during a press conference held in front of Samsung Electronics’ Seocho headquarters in October 2024.
The event, titled “Samsung Electronics’ RE100 Response Plan and Call for the Sale of Its System Semiconductor Design Division,” saw Park argue, “Samsung Electronics is struggling because of its misguided obsession with maintaining the system semiconductor design business,” adding, “As a result, the foundry division has failed to secure orders for the latest products from big tech companies.”
Hwang Min-seong, an analyst at Samsung Securities, also addressed the issue in his report titled “Geopolitical Paradigm Shift and Industry,” stating, “For Samsung Electronics’ foundry business, close interaction with customers is crucial. Just as Samsung is expanding its manufacturing presence in the U.S., localization is necessary, and spinning off the foundry business and listing it in the U.S. is worth considering.”
◆ Lee Jae-yong’s Dilemma: Why He Hesitates on the Spin-Off
Why has Chairman Lee Jae-yong not made a decisive move to spin off the foundry business? On the surface, practical concerns such as market conditions and investment requirements are frequently cited.
The first concern is uncertainty over securing customers after a spin-off.
Even if Samsung Electronics were to separate its foundry business, experts believe it would not be easy to immediately attract TSMC’s clients.
TSMC has built long-term trust with its customers and strengthened its semiconductor alliances through aggressive diplomatic efforts, backed by the U.S. government.
The second major concern is the enormous financial burden of investment.
The foundry business demands astronomical expenditures for advanced equipment, such as extreme ultraviolet (EUV) lithography machines.
Samsung Electronics has historically leveraged profits from its memory semiconductor division to invest in its foundry business, thereby enhancing its competitiveness. A spin-off could sever this internal support, significantly weakening the foundry unit’s financial stability.
Lastly, concerns over a potential decline in Samsung Electronics’ shareholder value cannot be ignored.
In 2020, LG Chem spun off its battery business to establish LG Energy Solution, which subsequently led to a drop in LG Chem’s stock price.
Considering these factors, Chairman Lee Jae-yong appears unconvinced about the necessity of a foundry spin-off.
According to Reuters, during a visit to the Philippines in October 2024, Chairman Lee responded to a question about the potential separation of the foundry unit by saying, “Samsung Electronics is hungry for growth in the foundry business” and that he was “not interested in spinning it off.”
◆ Samsung’s “Decisive DNA”
Former Chairman Lee Kun-hee demonstrated a relentless drive for innovation and decision-making, famously declaring in the "Frankfurt Declaration," “Change everything except your wife and children.”
He shifted Samsung’s focus from quantity to quality, advocating for a complete transformation in the company’s organization, culture, and systems.
One of the most iconic examples of his decisiveness was the infamous "Anycall Bonfire," where 150,000 defective mobile phones were burned to emphasize Samsung’s commitment to quality.
Many now call for Chairman Lee Jae-yong to exhibit a similar level of decisiveness.
There is no denying that Chairman Lee has achieved significant accomplishments despite a challenging business environment.
However, with Samsung Electronics facing a crisis and semiconductor industry support becoming a political issue, bolder innovation and decisive action appear increasingly necessary.
In 2019, Chairman Lee announced the “System Semiconductor Vision 2030,” setting a goal to become the world’s top player in system semiconductors by 2030. However, critics argue that concrete execution strategies and bold investment decisions have been lacking.
At the time, Samsung pledged to invest KRW 133 trillion (US$ 95.9 billion) over ten years in R&D and production facilities while training 15,000 professionals, but the results have fallen short of market expectations.
The semiconductor landscape is evolving rapidly, rendering past strategies obsolete. The market is now looking for bold leadership from Chairman Lee Jae-yong. His first step could be making a decisive call on the foundry spin-off and effectively persuading stakeholders.
#Samsung #foundry #semiconductor #TSMC #LeeJaeyong #spinOff #IDM #investment #chipIndustry #innovation
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- Naver Launches AI-Powered, Same-Day Delivery Shopping App—E-commerce Battle Heats Up Against Coupang
- Naver is set to engage in a fierce competition with Coupang.
On March 12, Naver launched its artificial intelligence (AI)-powered shopping app, "Naver Plus Store," approximately four and a half months after its pilot operation began in October last year.
The most notable feature of "Naver Plus Store" is that it separates the commerce function, which was previously operated as a shopping tab within Naver's main app, into an independent application. It also introduces "artificial intelligence" and "same-day delivery" as its new key strategies.
This move demonstrates Naver's determination to reverse its position with the new app, as it has been perceived as lagging behind Coupang in terms of growth.
Naver emphasizes that the app is designed to provide a highly personalized shopping experience. "Naver Plus Store" analyzes personal purchase history, shopping habits, recent interests, and seller-related data to recommend products and offer related promotions tailored to individual users.
Another notable aspect is the decision to separate shopping functions from the main Naver app. At a time when the trend is shifting towards integrating all functions into a single "super app," Naver's strategy of creating a standalone shopping app is considered an unconventional move.
Naver and Coupang currently dominate the e-commerce industry in South Korea. While market share figures vary by research firm, both platforms are estimated to hold similar shares of around 20–25%.
However, in terms of growth rate, Naver lags behind Coupang. Coupang recorded revenue of $30.268 billion in 2024, reflecting a 24% year-on-year increase. When measured at a constant exchange rate, the revenue growth rate rises to 29%. This is nearly twice the 14.8% growth rate Naver achieved last year.
Naver also struggles to compete with Coupang in terms of securing "loyal customers," who are considered the core users of a platform. In 2024, Naver generated KRW 195.2 billion (US$ 140.7 million) in membership revenue, averaging KRW 16.3 billion (US$ 11.8 million) per month. Given that Naver charges a monthly membership fee of KRW 4,900 (US$ 3.5) per user, the company's estimated number of paying members stands at around 3.3 million.
Coupang’s membership base is at least four times larger. While Coupang did not disclose its exact membership count for the end of 2024, it had already secured 14 million members by the end of 2023.
This explains why some analysts view Naver’s strategy of launching a separate shopping app to compete with Coupang as a risky move. Many in the e-commerce industry believe that Naver's existing loyal customer base alone is insufficient to divert traffic away from Coupang.
In fact, when Naver opened pre-registration for "Naver Plus Store" a week before its official launch, only around 400,000 users signed up.
Nevertheless, Naver still has opportunities to leverage. In terms of total transaction volume, which has traditionally been a key benchmark for evaluating e-commerce platforms, Naver is estimated to be ahead of Coupang. In 2024, Naver’s commerce division recorded a total transaction volume of KRW 50.3 trillion (US$ 36.3 billion), while Coupang’s transaction volume was estimated to be around KRW 45–46 trillion (US$ 32.4–33.2 billion), approximately 10% lower than Naver’s.
Naver appears to have been influenced by the belief that integrating its IT-driven capabilities with its shopping services could differentiate it from Coupang.
To that end, Naver has equipped "Naver Plus Store" with features that Coupang does not offer. One of the most prominent is the "AI Shopping Guide," which aims to enhance user convenience.
This feature allows users to receive product recommendations based on their preferences. For example, when searching for a "refrigerator," Naver categorizes products with descriptions such as "ideal for kimchi storage," "large freezer capacity," "suitable for restaurants," "recommended for newlyweds," and "includes ice-making function," making it easier for customers to find what they need.
This feature was developed using Naver’s proprietary AI model, "HyperCLOVA X," which is not available on Coupang. Initially implemented for electronics, Naver plans to expand its application to other product categories.
Naver is also determined to match Coupang’s strength in logistics, which has been regarded as an "economic moat" (a competitive advantage that is difficult for rivals to replicate).
With the launch of "Naver Plus Store," Naver renamed its delivery service from "Naver Arrival Guarantee" to "Naver Delivery (N Delivery)." It now offers various shipping options, including same-day delivery, next-day delivery, Sunday delivery, and scheduled delivery. A key feature is that Naver’s membership customers receive free shipping on purchases over KRW 10,000 (US$ 7.2).
Additionally, Naver is introducing free returns and exchanges for its membership customers, mirroring Coupang’s service. This move appears to be aimed at improving the perception that Naver’s delivery service is less convenient than Coupang’s.
Naver has already seen some positive results during the pilot operation of "Naver Plus Store." In the fourth quarter of 2024, Naver’s commerce division recorded a growth rate five times higher than the average market growth rate in the e-commerce industry. Some analysts attribute this strong performance to the test run of "Naver Plus Store."
#Naver #Coupang #ecommerce #AIshopping #NaverPlusStore #onlinedelivery #HyperCLOVAX #retailtech #Koreaecommerce #digitaltransformation
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- Woori Financial Group’s Board Reshuffle—Pressure Mounts on Yim Jong-ryong with One Year Left
- Woori Financial Group's board of directors is undergoing a major reshuffle. Chairman Yim Jong-ryong has about a year left in his term, and establishing relationships with the newly formed board has emerged as a new challenge.
Woori Financial Group operates under an oligopolistic shareholder system, where the board is composed of outside directors recommended by these shareholders. This sets it apart from other financial holding companies.
In other financial holding companies, where there are no controlling owners, the chairman has a strong influence over the selection of outside directors. Since these appointed directors then choose the next chairman, financial regulators scrutinize the process, suspecting it might be a form of "self-reappointment."
On the other hand, Woori Financial Group’s outside directors strongly represent the interests of its oligopolistic shareholders.
As four out of seven outside directors are being replaced at this year’s general shareholders’ meeting, Chairman Yim must reassess the board's stance.
◆ Woori Financial Group’s Board Reshuffle Strengthens Oligopolistic Shareholders' Control
On February 28, Woori Financial Group held an Executive Candidate Recommendation Committee meeting and announced new outside director candidates. Among the five outgoing outside directors, four—Yoon Soo-young, Shin Yo-han, Ji Sung-bae, and Jung Chan-hyung—were replaced, except for Yoon In-sub, who was recommended by Fubon Group.
Eugene PE nominated Kim Choon-soo, former CEO of Eugene Logistics, as a new outside director candidate. Kim previously served as the first head of the Ethics Management Office at Eugene Corporation, demonstrating expertise in internal control and ethical management.
Kiwoom Securities recommended Kim Young-hoon, former CEO of Daou Technology, as an outside director. Kim is an expert in IT and digital fields and was selected to enhance Woori Financial Group’s digital innovation and data-driven management.
Korea Investment & Securities nominated Lee Kang-haeng, former vice chairman of Korea Investment Holdings. Having worked in the financial industry for over 30 years, Lee is recognized for his leadership in ethical responsibility and internal control.
Additionally, Lee Young-sub, a professor at Seoul National University’s Graduate School of International Studies, was selected as an outside director candidate by the Executive Candidate Recommendation Committee. Lee previously served as the head of the Seoul National University Financial Economics Research Institute and president of the Korean Finance Association, making him a financial and economic expert.
Even though Woori Financial Group's board now consists of Chairman Yim as an internal director, three outside directors recommended by Woori Financial, and four outside directors recommended by oligopolistic shareholders, their influence does not appear to have weakened.
This is because, while Woori Financial Group ended the long-standing practice of outside directors simultaneously serving as outside directors for Woori Bank, the oligopolistic shareholders’ nominees were still appointed as Woori Bank's outside directors.
For example, Yoon Soo-young (recommended by Kiwoom Securities), who previously chaired Woori Bank’s board, stepped down as an outside director of Woori Financial Group but remained an outside director at Woori Bank. The same applies to Shin Yo-han, recommended by Eugene PE.
Although the number of oligopolistic shareholders decreased from five to four, the number of outside directors recommended by them increased from five to six.
◆ Oligopolistic Shareholders’ Criteria for Chairman Reappointment
The oligopolistic shareholders of Woori Financial Group determine the fate of its chairman.
Their decision-making criteria can be seen in the reappointment success and failure of former chairman Sohn Tae-seung.
In 2020, despite the risk of severe penalties from the derivative-linked fund (DLF) scandal, oligopolistic shareholders supported Sohn’s reappointment. Even as financial regulators sanctioned him and the National Pension Service, the largest shareholder, officially opposed his reappointment, Sohn secured another term thanks to their backing.
However, the situation changed in 2023.
As Sohn continued to clash with financial regulators after receiving a reprimand for the Lime Asset Management scandal, Woori Financial Group’s outside directors held a meeting at Woori Bank’s headquarters in Jung-gu, Seoul, on January 4, 2023, to discuss response strategies for the penalties but failed to reach a conclusion.
Sohn was initially determined to seek reappointment, but upon learning of opposition within the board, he decided to withdraw. On January 18, 2023, ahead of the first meeting of Woori Financial Group’s Executive Candidate Recommendation Committee, Sohn announced to the board that he would not seek reappointment.
◆ Woori Financial Group’s Governance Experiment: The Oligopolistic Shareholder System
Woori Financial Group took its first step toward privatization in 2016, marking the end of 15 years under government control since its establishment in 2001 through the consolidation of financially troubled institutions.
The government had attempted to privatize Woori Financial Group four times since 2010, but each attempt failed.
Due to its sheer size, the first three privatization attempts failed to attract competitive bids. In the fourth attempt, efforts to downsize led to some subsidiaries finding new owners, but Woori Bank remained under government control.
In the 2016 sale of Woori Bank, the government introduced a governance structure where oligopolistic shareholders were given the right to recommend outside directors, ensuring their participation in management. This approach attracted market interest as it allowed for management influence with relatively small investments.
Ultimately, Woori Financial Group’s privatization was completed with the participation of seven oligopolistic shareholders: Tongyang Life, Mirae Asset Global Investments, Eugene Asset Management, Kiwoom Securities, Korea Investment & Securities, Hanwha Life, and IMM Private Equity (PE).
Among them, Korea Investment & Securities, Kiwoom Securities, Hanwha Life, Tongyang Life, and IMM PE secured the right to recommend outside directors.
At the time, this system was seen as a way to eliminate the inefficiencies of government intervention that had hindered Woori Bank’s growth and to establish a shareholder-centered management model.
Nine years later, however, Woori Financial Group now faces the harsh reality of having the lowest performance among Korea’s four major financial holding companies, as well as frequent financial scandals.
As of 2025, only four oligopolistic shareholders remain. Tongyang Life and Hanwha Life have exited, while IMM PE recently sold off its entire stake, stepping away from Woori Financial Group’s management.
The remaining oligopolistic shareholders are Kiwoom Securities, Korea Investment & Securities, Fubon Group, and Eugene PE.
◆ Oligopolistic Shareholder System Fails to Meet Expectations
The oligopolistic shareholder system was initially expected to strengthen corporate oversight since many outside directors were actual shareholders, thereby ensuring their role as monitors and checks on management.
It was also seen as a way to prevent unqualified outside directors from merely rubber-stamping decisions, a common problem in financial holding companies.
Additionally, the system was anticipated to drive stock price growth and performance improvement.
However, Woori Financial Group has not outperformed other financial holding companies under this system.
Across multiple objective performance metrics, Woori Financial Group has fallen short compared to its competitors.
As of 2024, Woori Financial Group reported a net profit of KRW 3.086 trillion (US$ 2.23 billion), ranking fourth among financial holding companies. Since its privatization in 2016, it has never placed higher than third.
In comparison, the net profits of other financial holding companies were:
- KB Financial Group: KRW 5.0782 trillion (US$ 3.66 billion)
- Shinhan Financial Group: KRW 4.5175 trillion (US$ 3.26 billion)
- Hana Financial Group: KRW 3.7388 trillion (US$ 2.7 billion)
Critics argue that Woori Financial Group’s board has failed to properly oversee and hold management accountable.
On September 4, 2024, Financial Supervisory Service Governor Lee Bok-hyun criticized Woori Bank’s response to insider lending scandals, saying, "The culture of collusion was widespread. Whether through legal or non-legal measures, recent management must bear responsibility."
#WooriFinancialGroup #BoardReshuffle #OligopolisticShareholders #FinancialGovernance #Banking #Investment #Privatization #YimJongryong #FinancialRegulation #KoreaBanking
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- NH NongHyup Bank’s Kang Tae-young Enters 4th Internet Bank Race, Targeting Regional Growth and Digital Innovation
- NH NongHyup Bank has officially entered the race for the fourth internet-only bank license by joining the Korea SOHO Bank consortium. This is a significant move for NH NongHyUp Bank President Kang Tae-young.
Through the internet banking business, President Kang aims not only to expand opportunities for regional economic cooperation but also to enhance the bank’s digital capabilities, which could serve as a foundation for becoming a digital-leading bank.
On the 11th, according to Korea Credit Data (KCD), NH NongHyup Bank announced its participation in the Korea SOHO Bank consortium to establish the fourth internet bank.
Recently, NH NongHyup Bank submitted a letter of intent to invest in the Korea SOHO Bank consortium, finalizing its participation.
It is reported that NH NongHyup Bank spent considerable time and effort deliberating on whether to join the consortium, even seeking external consulting services.
A key factor behind NH NongHyup Bank’s decision is its unique position as a financial affiliate of the broader NongHyup network, which is dedicated to agricultural and rural development.
According to the internet-only bank licensing guidelines released by financial regulators in December of last year, inclusivity is a crucial criterion in the fourth internet bank licensing process.
Inclusivity involves not only providing financial support for low-income borrowers but also extending financial services to local businesses.
From NH NongHyup Bank’s perspective, participating in the establishment of an internet bank presents an opportunity to expand financial support to rural and regional areas.
For President Kang Tae-young, who declared digital-leading bank as his primary goal upon taking office, the chance to gain experience in digital banking is also an attractive aspect of this venture.
NH NongHyup Bank has been working to enhance its digital capabilities, centering around its flagship app, All One Bank. However, industry experts believe NH NongHyup Bank lags behind other commercial banks in digital competitiveness.
Unlike traditional banks, internet-only banks operate without physical branches, meaning all banking services must be accessible via apps or online platforms. As a result, internet banks require high levels of service stability and user convenience.
According to IGAWorks Mobile Index data, as of January, Toss and KakaoBank ranked first and second in terms of bank app user numbers.
By participating in the consortium, NH NongHyup Bank can gain indirect but valuable insights into internet banking operations, helping to strengthen its digital competitiveness.
In the long term, NH NongHyup Bank also sees potential for financial gains.
Existing internet banks such as K Bank and KakaoBank reported record-high profits last year, demonstrating strong financial performance.
By holding a stake as a consortium member, NH NongHyup Bank could benefit from potential future profits.
Additionally, the bank has an increasing need to develop new revenue sources. Its contract as the partner bank for cryptocurrency exchange Bithumb has expired, making a negative impact on profitability inevitable.
NH NongHyup Bank expects that synergy will emerge from combining Korea Credit Data’s small business data with NH NongHyup Bank’s nationwide network.
A bank representative stated, “NH NongHyup Bank aims to expand its financial services this year, including corporate banking and support for small businesses across Korea. We will actively collaborate to provide more innovative financial services through the new internet bank.”
Financial regulators will accept applications for the fourth internet-only bank license on March 25 and 26.
#NHNongHyupBank #KoreaSOHOBank #internetbank #digitalbanking #KangTaeyoung #fintech #finance #banking #investment #businessstrategy
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- Another Fatal Accident 10 Days After Hyundai Engineering CEO Joo Woo-jeong’s Apology
- "We will fully cooperate with all investigations and take necessary actions while implementing thorough measures to prevent such accidents from recurring in the future."
This was the statement made just ten days ago, on February 28, by Joo Woo-jeong, CEO of Hyundai Engineering, regarding the collapse of a bridge construction site on the Seoul-Sejong Expressway. However, on March 10, another fatal accident occurred at the construction site of the Hillstate apartment complex in Pyeongtaek's Hwayang District.
With consecutive fatal accidents at Hyundai Engineering’s construction sites, criticism is mounting that Joo’s commitment to "safety management" is proving to be an empty promise.
According to the National Assembly’s Land, Infrastructure, and Transport Committee on the 11th, Joo will attend the committee’s plenary meeting scheduled for the morning of March 13.
During this meeting, discussions will focus on the investigation into the passenger plane crash at Muan Airport on December 29, 2023, as well as the enactment of a special law related to the incident. Additionally, inquiries will be made regarding the Seoul-Sejong Expressway construction site accident.
A representative from the office of Moon Jin-seok, a lawmaker from the Democratic Party and a member of the Land Committee, stated, "The representatives of Hyundai Engineering and its subcontractor, Jangheon Industry, will attend the meeting regarding the Seoul-Sejong Expressway accident. There will be questions about the exact cause of the accident and the support measures for the victims."
Joo is expected to face heavy criticism from both ruling and opposition lawmakers, not only for the expressway accident but also for the apartment construction site accident that occurred just a day earlier.
According to the construction industry, the Ministry of Employment and Labor immediately issued a work suspension order at the Hillstate Pyeongtaek Hwayang apartment construction site and launched an investigation into the cause of the accident.
The ministry is also reportedly reviewing whether the accident violated the Serious Accidents Punishment Act.
At around 10:30 AM on the previous day, two workers from a subcontractor fell while working at the apartment construction site in Pyeongtaek’s Hwayang urban development area, which is being built by Hyundai Engineering.
According to police investigations, the workers fell when a tower crane lifted a formwork panel that had not been fully dismantled. One worker fell from a height of 3 meters and was injured, while another fell 6 meters and died.
Earlier, on February 25, a fatal accident occurred at the Cheongyongcheon Bridge construction site on the Seoul-Sejong Expressway, where Hyundai Engineering was the lead construction company. That accident resulted in 10 casualties, including four deaths.
Following that incident, Joo publicly apologized at a press conference on February 28, pledging to thoroughly investigate the cause and provide full support to the victims and their families.
Joo has only been in his position as Hyundai Engineering’s CEO for about two months. Even aside from his background as a finance expert rather than a construction specialist, it is a challenging time for him to personally oversee safety across all project sites nationwide.
Additionally, the exact causes of these recent accidents have yet to be determined, making it unclear who bears direct responsibility, including Hyundai Engineering.
However, despite these factors, as the leader of a major construction firm where repeated fatal accidents have occurred, Joo will find it difficult to avoid fundamental responsibility.
The Serious Accidents Punishment Act, which took effect on January 27, 2022, places significant accountability on prime contractors and executives, emphasizing the ultimate goal of preventing serious accidents.
Following the expressway accident, Joo stated that Hyundai Engineering would not evade responsibility. The company also conducted nationwide safety inspections. However, just ten days later, another accident occurred.
Joo has emphasized, "Safety and quality are not negotiable—they are our highest and most fundamental values. They are the very reasons for our existence."
Kim Jung-bae, head of Hyundai Engineering’s Safety and Quality Division, added, "The day after the February 25 accident, we halted work at all our sites and conducted internal safety inspections."
Hyundai Engineering reported an operating loss of KRW 1.2401 trillion (US$ 894.4 million) in Q4 2023 due to substantial losses from overseas projects.
Initially, industry attention was focused on how much Hyundai Engineering, with its annual revenue of KRW 14 trillion (US$ 10.1 billion), could recover its profitability this year.
Even after the expressway accident, financial analysts estimated that the incident could negatively impact Hyundai Engineering’s earnings by at least KRW 100 billion (US$ 72.1 million) and up to KRW 200 billion (US$ 144.3 million).
However, with consecutive fatal accidents, the company’s core issue is shifting from financial recovery to safety management.
Joo now faces the urgent challenge of reviewing and strengthening Hyundai Engineering’s safety management system.
Hyundai Engineering stated that since establishing its safety and health management system in 2022, it has implemented safety measures that exceed the 13 mandatory safety compliance items required by law.
In 2023, the company reinforced industrial safety committee operations, improved contractor safety management, and established a new external communication policy for safety and health in addition to internal safety regulations.
Following the latest apartment construction site accident, a Hyundai Engineering representative stated, "First, we express our deepest condolences to the deceased worker and their family, as well as to those who were injured. The cause of the accident is currently under investigation, and we will do our utmost to handle the situation and implement countermeasures."
#JooWoojeong #HyundaiEngineering #construction #safety #workplaceaccident #SeriousAccidentsPunishmentAct #SeoulSejongExpressway #Pyeongtaek #business #corporategovernance
