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- Choi Yoon-ho of Samsung SDI Sells Non-Core Polarizing Film, Seizes Opportunity with Battery Investments
- Choi Yoon-ho, CEO of Samsung SDI, has made a bold move to aggressively expand the company’s battery business. Samsung SDI has decided to sell its polarizing film manufacturing division to a Chinese company for KRW 1.1 trillion (USD 793.3 million). The proceeds from this sale are expected to be used to enhance battery production facilities and fund next-generation battery research and development.
While competitors are slowing down investments due to the electric vehicle (EV) market's growth deceleration, Samsung SDI, which has previously maintained a cautious investment approach, sees this as a unique opportunity to ramp up investments.
According to industry sources on the 10th, Choi’s decision to sell the polarizing film business reflects his belief that the current slowdown in the EV market is an ideal time for investment. Polarizing films were once a key profit driver for Samsung SDI, but oversupply concerns arose with Chinese companies ramping up production. The improved performance in the first half of the year due to increased sales of large-area TV polarizing films provided the right moment for the sale.
The Chinese subsidiary involved in the sale, the Wuxi plant, recorded sales of KRW 568 billion (USD 409.5 million) and a net profit of KRW 34.3 billion (USD 24.7 million) in the first half of the year. Although the plant is financially stable with a debt ratio of 61.7%, its sale is part of Samsung SDI’s strategic focus on the battery business.
The funds raised from the sale are expected to be reinvested into expanding battery facilities, particularly in North America, where Samsung SDI has partnered with major automakers for joint ventures. The company’s cash reserves stood at KRW 1.9 trillion (USD 1.4 billion) at the end of the first half of the year, but more funds are needed for future investments.
Samsung SDI recently finalized an agreement with GM to build a battery plant in North America with an annual production capacity of 27 GWh, requiring a total investment of KRW 2.293 trillion (USD 1.7 billion) by October 2028.
Joo Min-woo, a researcher at NH Investment & Securities, noted, “Samsung SDI’s capital expenditure (CAPEX) is expected to rise to KRW 6.5 trillion (USD 4.7 billion) in 2024, following the joint venture with GM, and further increase in 2025. The commitment of major automakers to the EV transition remains a positive signal despite the current challenging environment.”
Samsung SDI is also working with Stellantis to build two battery plants in Indiana, with production capacities of 33 GWh and 34 GWh, respectively. The first plant’s investment amounts to KRW 1.6313 trillion (USD 1.2 billion), while the second plant will require KRW 2.6556 trillion (USD 1.9 billion). The company has decided to accelerate the operation of the first plant to begin within 2024, ahead of the original first-quarter 2025 target, with the second plant slated for completion in 2027.
In addition to expanding battery production capacity, funds from the polarizing film sale will likely be used for next-generation battery research and development. Samsung SDI has been investing over KRW 1 trillion (USD 720 million) annually in R&D since 2022. In the first half of 2024, it spent KRW 693.2 billion (USD 499.8 million), representing 7.2% of its revenue, a 19% increase over the same period last year.
For comparison, LG Energy Solution invested KRW 520 billion (USD 374.9 million) in R&D in the same period, while SK On spent KRW 148.5 billion (USD 107.1 million). Samsung SDI’s R&D spending is significantly higher, focused on developing next-generation battery technologies such as solid-state batteries, dry-process technology for cost reduction, high-power energy storage system (ESS) modules for uninterruptible power supplies (UPS), rapid-charging technology, lithium iron phosphate (LFP) batteries, and pouch-form battery solutions.
Choi’s decision to sell the polarizing film business and focus on the battery sector represents a calculated risk to strengthen Samsung SDI’s business structure.
Samsung SDI’s electronic materials division (semiconductor and display materials) has consistently delivered double-digit operating profit margins, acting as a buffer against the volatility in the battery business. Meanwhile, the battery division has faced difficulties, with electric vehicle battery prices and shipments declining simultaneously. In the second quarter, the battery division reported sales of KRW 3.8729 trillion (USD 2.8 billion) and an operating profit of KRW 208 billion (USD 150 million), a year-on-year decrease of 27% in sales and 46% in operating profit.
Unlike its competitors, LG Energy Solution and SK On, which have aggressively pursued joint ventures in North America in recent years, Choi has taken a more cautious approach, waiting for the right moment to invest. He now views the current slowdown in the EV battery market as an opportunity for expansion.
Kim Ho-seop, a researcher at Korea Ratings, said, “Samsung SDI has maintained a conservative investment stance since the early stages of the secondary battery market, resulting in stronger financial flexibility compared to its competitors. This financial stability allows Samsung SDI to continue investing without major concerns about its credit rating, even amid the recent downturn in the battery market.”
#ChoiYoonho #SamsungSDI #BatteryExpansion #PolarizingFilmSale #NextGenBatteries #EVBatteryMarket #GMJointVenture #NorthAmericaBatteryPlant #StellantisPartnership #BatteryR&D #SolidStateBattery #SamsungSDIInvestments
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- Seo Jung-jin Confident in KRW 5 Trillion Revenue Next Year with Zymfentra, Considers CDMO Expansion
- Celltrion Group Chairman Seo Jung-jin expressed confidence in achieving this year’s business goals, driven by the successful launch of Zymfentra, a treatment for autoimmune diseases, in the U.S.
Seo is aggressively promoting Zymfentra in the U.S. through TV and social media marketing campaigns to expand sales. On September 6, Seo and his son, Seo Jin-seok, CEO of Celltrion's business division, attended the 22nd Morgan Stanley Global Healthcare Conference in New York, which attracted over 400 healthcare companies and investors.
At the conference, Seo discussed Celltrion’s growth prospects and new business vision during a Q&A with Daniel Cohen, Morgan Stanley's U.S. healthcare investment marketing director. He highlighted Zymfentra's success, noting that the drug, originally launched as Remsima SC in Europe, was approved as a new drug in the U.S. in March 2024. Within six months, Zymfentra secured contracts with three major U.S. pharmacy benefit managers (PBMs), laying the groundwork for sales expansion.
Seo is optimistic that with ongoing media campaigns, Celltrion will achieve its U.S. sales target of KRW 250 billion (US$180 million) this year, and that the company could reach KRW 5 trillion (US$3.6 billion) in annual revenue by 2025 if Zymfentra continues to grow as planned.
In addition to focusing on sales, Celltrion is exploring further investments for future growth. Seo announced plans to expand manufacturing facilities, either domestically or abroad, with the decision expected by the end of the year. These facilities, owned 100% by Celltrion subsidiaries, would also support the company’s potential entry into the contract development and manufacturing organization (CDMO) business.
Seo believes that with Celltrion’s comprehensive knowledge of the entire pharmaceutical supply chain—from development to clinical trials, production, approval, and sales—the company can offer tailored services to clients, enhancing its competitiveness.
Additionally, Seo emphasized the need for investments to secure future competitiveness, stating that Celltrion is actively considering mergers and acquisitions to further its global ambitions. He mentioned that the company is evaluating several potential target companies that could create synergies with Celltrion.
Seo's son, Seo Jin-seok, also gave a presentation titled "From Pioneer to Innovator," where he outlined Celltrion's progress in developing new drugs and biosimilars. The company is expanding into antibody-drug conjugates (ADC) and multi-specific antibodies, with plans to unveil multiple “best-in-class” drug candidates through next year.
Celltrion aims to commercialize three ADC and three multi-specific antibody drugs by 2029. Seo Jin-seok noted that the two most advanced ADC candidates will be revealed by the end of this year, with clinical trials starting next year.
In the biosimilar business, Celltrion aims to obtain approval for 11 products by 2025 and to secure 22 products by 2030, further strengthening its market presence.
#Celltrion #SeoJungjin #Zymfentra #CDMO #biopharma #biosimilars #ADC #globalexpansion #healthcareconference #pharmaceuticals
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- SK Group Faces Chinese Price Pressures, Chey Tae-won Rebalances to Boost Battery Business
- SK Group’s battery business is facing significant challenges due to the rise of low-cost Chinese batteries and a slowdown in electric vehicle (EV) market growth. However, Chey Tae-won, Chairman of SK Group, is determined to position the battery value chain as a core future business for the group.
Chey is strengthening the group’s profitability by merging profitable subsidiaries with SK On and supporting further investments in the battery business by merging SK E&S into SK Innovation. This effort is part of a broader strategy to rebalance the group’s business portfolio.
Moreover, SK Group is restructuring its battery materials business, including copper foil, separators, and silicon anode materials, as well as its battery recycling operations. The aim is to improve the group’s financial structure, which has been weakened by numerous acquisitions, and to streamline overlapping businesses.
According to industry sources, SK Group’s success in key areas like AI, semiconductors, and energy depends on the success of its battery value chain.
SK Group’s battery value chain includes SK On (battery manufacturer), SK Nexilis (copper foil and silicon anode material manufacturer), SK IE Technology (separator manufacturer), SK Materials (silicon anode materials), and SK Ecoplant (EV battery recycling).
As the challenges facing SK Innovation have spread to SK On, Chey has concentrated the group’s resources on SK On, which is at the top of the battery value chain. To support further battery investments, SK Group has merged SK E&S, a highly profitable energy and power subsidiary, into SK Innovation.
SK On is also set to merge with SK Trading International on November 1, 2024, and with SK Entom in February 2025. These mergers aim to enhance SK On’s profitability by improving its cash flow, which has been strained by large investments in battery production capacity and the financial burden from expanding its facilities.
Since its spin-off from SK Innovation in October 2021, SK On has reported losses for 11 consecutive quarters up to the second quarter of 2024. Despite making significant investments to scale production, the company has been hit hard by the recent slump in EV demand.
Jang Su-myung, a researcher at Korea Ratings, noted, “The merger of SK Innovation and SK E&S will strengthen cash flow and alleviate the rise in financial burdens, but improving SK On’s profitability and corporate value remains crucial for a successful IPO and relieving pressure on its credit rating.”
The rapid rise of Chinese battery manufacturers in the EV and secondary battery market poses a significant threat to SK Group’s battery business. With Chinese companies increasing their market share in Europe and automakers increasingly adopting lithium iron phosphate (LFP) batteries from China, Chinese battery makers are gaining dominance.
In response, SK Group is restructuring its battery value chain. SK IE Technology, the group’s separator manufacturing subsidiary, is considering either a full sale or a partial stake sale as part of this restructuring.
SK IE Technology reported sales of KRW 107.8 billion (USD 77.7 million) in the first half of 2024, with an operating loss of KRW 126.1 billion (USD 90.9 million). Sales have more than halved compared to the previous year, and the company has shifted from profitability to losses due to the high fixed-cost structure of the separator manufacturing business and lower customer utilization rates.
SK IE Technology is reviewing the timeline for starting production at its Poland plant and has postponed a planned investment in North America until January 2025. The company is also in the process of selling its Cheongju plant by the end of this year to raise liquidity.
Meanwhile, SK Nexilis has decided to maintain its copper foil business. SKC, the intermediate holding company, recently injected KRW 700 billion (USD 504.7 million) to pay off acquisition loans for SK Nexilis, reducing interest expenses. SKC has also simplified the governance structure by making SK Nexilis a wholly-owned subsidiary.
Noh Woo-ho, a researcher at Meritz Securities, said, “There’s a possibility that SK On will resume copper foil purchases for Hyundai and Kia production lines in the fourth quarter, and sales to Samsung SDI’s small batteries, energy storage systems, Chinese EV batteries, and Japanese cylindrical battery manufacturers are expected to start in the third quarter, marking a low point in sales.”
SK Nexilis plans to increase overseas production at its factories in Malaysia and Poland, which offer lower labor and electricity costs, while focusing its domestic operations on product design and research and development to improve cost competitiveness.
SK Ecoplant is exploring new business opportunities in EV battery recycling, leveraging its accumulated infrastructure in North America. The company also plans to increase the utilization of facilities in Europe and Asia. Additionally, SK Ecoplant raised KRW 131.6 billion (USD 94.9 million) by selling a 13.09% stake in Ascend Elements, a U.S. battery recycling company.
This sale follows SK Ecoplant’s success in developing core technologies to increase the recovery rate of key minerals like nickel, cobalt, and lithium from recycled batteries.
Since the start of 2024, Chey Tae-won has been actively restructuring the group’s business, focusing on AI, semiconductors, and energy, while divesting non-core businesses to improve the financial structure.
The direction is clear: SK Group is concentrating on industries with high future growth potential while streamlining its diversified operations to strengthen its financial health.
As of the first half of 2024, SK Group’s total consolidated debt stood at KRW 86.6955 trillion (USD 62.5 billion), an increase of nearly 80% from KRW 48.3 trillion (USD 34.8 billion) in 2020. The group’s debt ratio and debt-to-equity ratio have also risen to 158.8% and 40.3%, respectively.
At a global management environment meeting on September 7, Chey Tae-won said, “In a challenging global environment, competition in future core businesses like AI, semiconductors, and energy solutions is intensifying. We must stay sharp and respond quickly.”
#CheyTaewon #SKGroup #BatteryBusiness #SKOn #BatteryMaterials #SKInnovation #ElectricVehicles #ChineseBatteries #CopperFoil #BatteryRecycling #SKNexilis #SKIET
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- LG's Koo Kwang-mo Faces China's 'Cost-Effectiveness Threat': Focusing on HVAC, XR, and AI for Growth
- In 2024, as LG Group Chairman Koo Kwang-mo marks his sixth year in office, China's aggressive price competitiveness in sectors such as batteries, OLEDs, and home appliances is rapidly closing in on LG.
After boldly deciding to "select and focus" by exiting markets like smartphones and solar power, Chairman Koo has been working to strengthen LG's competitiveness in new areas such as heating, ventilation, and air conditioning (HVAC), artificial intelligence (AI) home systems, OLED, and extended reality (XR) to fend off the rising threat from China.
On September 9, industry insiders analyzed that the heightened competitiveness of Chinese home appliance companies now poses a serious challenge to South Korea’s home appliance industry.
At a press conference at IFA 2024, Europe’s largest home appliance exhibition held in Berlin, Germany, LG Electronics CEO Cho Ju-wan stated, “Chinese home appliance companies have significantly improved in terms of quality, and we now need to keep an eye on them.”
In fact, China’s leading home appliance company Midea recorded KRW 70 trillion (US$50.5 billion) in sales in 2023, an 8.1% increase from 2022, claiming the top spot in global home appliance sales. In comparison, LG Electronics' 2023 sales dropped by 2.7% to KRW 44.3 trillion (US$32 billion).
While LG Electronics' home appliance division has seen stagnant sales, Chinese companies have taken over the mid-to-low-end home appliance market.
The display industry is also facing tough competition.
According to market research firm Omnia, in the first quarter of 2024, China overtook Korea for the first time in the global OLED panel market, capturing a 49.7% share, compared to Korea's 49%. This is a dramatic shift from the first quarter of last year when Korea held a 62.3% share and China 36.6%.
Until last year, LG Display, along with Samsung Display, dominated the global OLED market. However, due to China’s aggressive low-cost strategies, their global market share has been declining.
Although LG Display still leads the large OLED TV market, Chinese companies are using their domestic products for smartphone OLEDs, causing a continued drop in LG’s global market share.
The battery sector is facing a similar situation.
As of July this year, Korea's three battery companies held a combined global market share of 46.5%, excluding China, a 2.1 percentage point drop from the same period last year. In contrast, Chinese battery manufacturers increased their share by 2.3 percentage points to 53.7%.
LG Energy Solution’s market share decreased by 1.4 percentage points year-on-year to 26.2%. While battery usage increased by 6.9% compared to last year, it still fell short of China’s CATL, which saw an 11% increase, securing second place in market share.
Chairman Koo is expanding investments in new business areas such as HVAC, AI home systems, OLED, and XR.
He is seeking new growth opportunities in areas where China’s technological capabilities have yet to catch up.
On September 9, LG Electronics announced its acquisition of a stake in Mo-Sys Engineering, a UK-based virtual production solutions and camera robotics company.
Previously, LG had limited its role in the XR market to supplying microLED and LED panels through LG Display. However, with this acquisition, it is making a serious push into the XR market.
Chairman Koo is also focusing on the HVAC business, which LG Electronics is pursuing as a future growth driver under the global trends of AI and eco-friendliness.
On September 9, LG Electronics announced a partnership with Dongwon Group to collaborate on the construction of high-efficiency HVAC solutions. Dongwon Group has committed to investing KRW 40 billion (US$28.8 million) by 2030.
On September 1, LG also held a consortium agreement ceremony with China’s Harbin Institute of Technology for the "China Consortium for Advanced Heat Pump Research (CCAHR)." This marks the establishment of a consortium to develop next-generation heat pump core technologies in Asia, following similar efforts in North America and Europe.
The AI home business is also progressing steadily.
An AI home system connects home appliances to a single hub that uses AI to automatically analyze and provide personalized services for users—a next-generation home appliance system.
Although the technology is not yet fully developed, LG Electronics, alongside Samsung Electronics, is leading the world in AI home technology. On September 8, Ryu Jae-chul, head of LG Electronics’ Home Appliance & Air Solutions (H&A) division, stated at IFA 2024, "We will open the AI home era within this year."
In July, LG Electronics acquired the Dutch IoT company 'At Home' for KRW 85 billion (US$61.3 million), and recently unveiled 'LG ThinQ On,' the core of its AI home system. ThinQ On connects home appliances and IoT devices 24/7, keeping them in optimal condition.
LG is also pushing hard to develop next-generation OLED technology, especially in automotive OLED displays, where it is recognized as the leader.
According to market research firm Omdia, LG Display ranked first with a 27.7% market share in the global premium automotive display market in 2023. In 2019, LG Display became the first in the industry to mass-produce plastic OLED (P-OLED) for vehicles, and it also developed ATO, an OLED using a glass substrate.
In smartphone OLED technology, LG has secured "two-stack tandem" technology, which offers higher brightness and energy efficiency, and supplies OLED panels to Apple. Although China’s BOE is rapidly improving its technological capabilities, there is still a significant technological gap, according to industry experts.
Chairman Koo is pursuing both qualitative and quantitative growth for LG Group in the long term.
During a visit to LG’s North American business sites in June this year, Chairman Koo encouraged LG employees, saying, "Have confidence and pride. Let’s make big steps in this long race for sustainable growth by embracing challenges and leaps forward."
#LG #KooKwangmo #ChinaThreat #HVAC #OLED #XR #AIHome #LGDisplay #BatteryMarket #HomeAppliance #SustainableGrowth
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- Samsung Electronics: End of the "Lee Kun-hee Era" Growth? Lee Jae-yong Seeks New Breakthroughs
- Industry experts suggest that Samsung, led by Chairman Lee Jae-yong, must swiftly identify new growth businesses and undergo business transformation to recreate the explosive growth witnessed during the era of the late Chairman Lee Kun-hee.
Samsung's key businesses, such as memory semiconductors and smartphones, which were elevated to global leadership under Lee Kun-hee, no longer demonstrate the same competitiveness and growth potential. Moreover, the rapid rise of Chinese manufacturing has intensified competition across Samsung's major business segments, raising concerns about declining profitability.
Chairman Lee is expected to not only explore new growth drivers in areas like artificial intelligence (AI), semiconductor foundry, and robotics, but also to establish an efficient operational system for the much larger Samsung Electronics of today compared to the past.
According to industry reports, from 2014, when Lee effectively took over as head of Samsung, to 2024, Samsung Electronics' market capitalization has grown by approximately 2.2 times, and its sales by around 1.5 times (based on 2024 performance forecasts).
In 2014, Samsung Electronics recorded an operating profit of around KRW 25 trillion (US$ 18.0 billion). This figure nearly doubled to KRW 51 trillion (US$ 36.8 billion) by 2021. However, in 2023, operating profit dropped to KRW 6 trillion (US$ 4.3 billion), with expectations for 2024 reaching approximately KRW 45 trillion (US$ 32.5 billion).
This marks a stark contrast to the period under Lee Kun-hee, when Samsung Electronics experienced explosive growth. During his 27-year leadership from 1987 to 2014, the company’s market capitalization increased 348 times, sales grew 34 times, and operating profit surged 125 times. Even during the 10 years between 2003 and 2013, Samsung's sales and operating profit grew fivefold, significantly outpacing the current decade's growth rate.
The lack of growth in recent years is attributed to weakened competitiveness in key sectors such as semiconductors, smartphones, displays, and consumer electronics.
Samsung Electronics, once boasting a significant lead in memory semiconductors, has recently ceded some leadership to SK Hynix in areas like high-bandwidth memory (HBM) and server DDR5, failing to fully capitalize on the AI semiconductor boom.
In smartphones, the gap with Apple in the premium market has widened, while Chinese manufacturers are fiercely challenging Samsung’s mid- and low-end models and foldable phones, placing Samsung in a difficult situation.
Some analysts predict that memory semiconductors and smartphones, which led Samsung’s quantum leap during Lee Kun-hee’s tenure, may be limited to single-digit growth rates in the future.
As a result, it has become imperative for Chairman Lee Jae-yong to find new growth drivers for his ‘New Samsung’ to replicate past growth.
Lee Jae-yong is exploring breakthroughs in areas such as AI, foundry, and robotics.
The AI boom is not only driving demand for Samsung's semiconductors but is also emerging as a key tool to overcome growth stagnation in smartphones and consumer electronics.
AI implemented directly on devices, known as "on-device AI," can help consumers maximize work efficiency or enjoy leisure in new ways. This could significantly expand previously small business models, such as subscription services.
In July this year, Samsung Electronics acquired the British startup Oxford Semantic Technologies, which holds knowledge graph technology, to integrate data and enable more personalized AI experiences. Knowledge graph technology connects related information in the form of linked graphs.
The foundry business is another sector Chairman Lee has pinpointed as Samsung's new growth engine.
Unlike the cyclical nature of the memory semiconductor business, the foundry business, which operates on a contract basis, is less sensitive to economic cycles and is considered to have both higher profitability and growth potential. For instance, during the semiconductor boom in 2022, Samsung’s memory semiconductor operating profit margin was about 30%, while Taiwan’s TSMC, a leading foundry company, achieved a profit margin of 52%.
As a latecomer in the foundry business, Samsung has faced difficulties, reporting operating losses in the foundry division for the past two years. However, if the company can overcome technological hurdles and stabilize the business, there is optimism that the foundry division could generate more profit than the memory semiconductor division within the next decade.
Samsung is also expected to see visible achievements in the robotics sector.
The company has secured a call option to acquire a 59.99% stake in Rainbow Robotics, a robotics venture, and is examining domestic and foreign companies with competitive robotics technology.
Samsung is reportedly considering deploying collaborative dual-arm robots from Rainbow Robotics in its semiconductor production lines. Additionally, Samsung is expected to launch its wearable robot "Botfit," which aids users with mobility issues, as early as October this year.
Chairman Lee Jae-yong inspects the construction site of the next-generation semiconductor R&D complex at the Giheung Campus on October 19, 2023.
Chairman Lee is also expected to establish a system that allows for more efficient management of the much larger Samsung Electronics compared to the past.
In the past, charismatic leadership from Lee Kun-hee, supported by Samsung's Future Strategy Office, handled most of the company’s major issues. This centralized decision-making system was praised for allocating the company’s limited resources optimally and achieving the best results.
However, given Samsung's current management structure and internal and external business environment, it is difficult to replicate such leadership today.
Therefore, Chairman Lee is reportedly pursuing decentralization by granting significant decision-making authority to professional managers in each business division while directly overseeing important decisions such as future business direction, major mergers and acquisitions (M&A), and capital allocation.
Industry experts note that while Chairman Lee may lack the charisma of his predecessor, he excels in building relationships with global leaders and making informed decisions, a skill on par with the former chairman.
For example, Chairman Lee’s acquisition of Harman in 2017, initially met with skepticism, is now regarded as a highly successful "big deal."
An industry insider commented, "As a company grows larger, its growth rate naturally slows, and this is a challenge Chairman Lee Jae-yong must solve. The DNA that led to victories in the semiconductor industry in 1983 and the smartphone industry in 2009 likely still remains within Samsung."
Keywords:
#Samsung #LeeJaeYong #AI #foundry #robotics #semiconductors #Harman #smartphones #growthstrategy #businessinnovation
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- Kim Beom-soo’s Legal Risks and Labor Disputes, Kakao’s Reform Amid Internal and External Struggles
- Nearly a year has passed since Kakao, a leading information technology (IT) company in South Korea, became embroiled in legal risks. With the recent arrest of its founder, these risks have reached a peak, and tensions between management and labor have further complicated Kakao’s attempts at corporate renewal.
As of August 6, according to reports from the IT industry, internal discord within Kakao is deepening, driven by the founder’s legal troubles and ongoing labor-management conflicts.
Since October 2022, Kakao has been dealing with allegations of market manipulation related to its acquisition of SM Entertainment, which brought legal issues to the forefront for its top executives. While the company has been pushing for aggressive reforms and restructuring, internal and external disagreements over the direction of these reforms have persisted.
Internally, labor-management conflicts over these reforms have escalated. On August 4, the Kakao branch of the National Chemical Fiber Food Industry Union (Kakao Union) announced that it had sent a notice of failed negotiations to the company on July 29 and subsequently applied for dispute mediation with the Gyeonggi Regional Labor Relations Commission.
The union claimed in its statement that while Kakao has been actively pursuing management reforms for about a year, its demands were ignored. On August 23, the union also called for an internal audit into allegations of embezzlement and breach of trust involving executives tied to Kakao Entertainment’s acquisition of a drama production company.
Specifically, the union demanded the termination of advisory contracts and the dismissal of Kim Seong-su, former co-CEO of Kakao Entertainment, and Lee Joon-ho, former head of Investment Strategy. They also called for the cancellation of advisory contracts for former Kakao Pay CEO Ryu Young-jun and former Kakao Enterprise CEO Baek Sang-yeop.
In March of this year, the union had criticized the company's decision to appoint new CEOs for Kakao Mobility and Kakao Entertainment without adequately addressing ongoing legal issues.
The breakdown in negotiations between Kakao’s labor union and management marks the first such incident since the union’s establishment in October 2018.
Kakao union leader Seo Seung-wook commented, "Negotiations have dragged on for more than 10 months due to management’s delays and failure to submit agenda items. We’ve declared the breakdown and will explore all means, including collective action, to push for reforms."
In response, Kakao expressed regret over the situation and stated that it would continue to communicate with the union.
Industry insiders suggest that maintaining internal cohesion and preventing workforce departures will be crucial to avoiding further disruption.
One industry source noted, "Kakao's internal atmosphere has worsened significantly as major issues have repeatedly surfaced over the past few years."
Since October 2022, Kakao has been emphasizing management reforms to address its legal risks. In connection with the allegations of market manipulation, the Financial Supervisory Service raided founder Kim Beom-soo's office on August 10, 2023. On October 19, 2023, the prosecution arrested Bae Jae-hyun, former Chief Investment Officer of Kakao.
In December, Kim stated, "I am committed to reforms, even considering changing the company's name if necessary," and began streamlining operations. By August 2024, Kakao had reduced its number of affiliates to 123, down from 144 the previous year, trimming 15 affiliates this year alone.
Additionally, the company implemented leadership changes at key affiliates and established independent entities such as the Management Innovation Committee and the Compliance and Trust Committee to oversee decision-making and governance reforms.
However, even as the new year began, Kakao’s legal risks intensified, culminating in the arrest of Kim Beom-soo in July 2024. With Kim absent, concerns have arisen over the potential loss of momentum in the company's reform efforts.
Under the leadership of CEO Chung Shin-a, Kakao has entered emergency management mode, but there have been no clear signs of reform progress. Meanwhile, Kim’s first court trial is scheduled for September 11.
#Kakao #KimBeomsoo #legalrisk #corporatereform #managementconflict #marketmanipulation #ITindustry #Kakaounion #leadershipchange #companyrestructuring #emergencymanagement #courttrial #laborrelations
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- Samsung 2nd in 5G Device Market Share in H1 2024, India Surpasses US as 2nd Largest Market
- Samsung Electronics ranked second in the global 5G device market in the first half of 2024, with a 21% market share. Apple led the market with a 25% share.
India emerged as the second-largest 5G device market globally, surpassing the U.S., thanks to rapid growth in 5G adoption during the first half of the year.
According to a report released on August 5 by Hong Kong-based market research firm Counterpoint Research, global shipments of 5G devices in the first half of 2024 increased by 20% year-on-year. For the first time, 5G devices accounted for more than 50% of total device shipments.
Samsung maintained second place in global 5G device market share, driven by strong performance from its Galaxy A series and flagship Galaxy S24 series, contributing significantly to its 21% share.
Apple retained the top spot with a 25% share, bolstered by strong sales of its iPhone 15 and 14 series.
Both Samsung and Apple dominated the top 10 models of 5G devices in the first half of 2024, each securing five spots on the list.
Xiaomi, with a sharp increase in shipments in the Indian market, secured third place in global 5G device market share.
India surpassed the U.S. to become the world’s second-largest 5G device market after China.
Prachir Singh, an analyst at Counterpoint Research, stated, "India overtook the U.S. to become the second-largest 5G device market in the first half of 2024, driven by a surge in shipments from brands like Xiaomi, Vivo, and Samsung in the budget segment."
Tarun Pathak, a researcher at Counterpoint Research, added, "5G devices accounted for 54% of all mobile devices in the first half of the year. With increasing supply of affordable 5G devices and the expansion of 5G networks, this trend is expected to accelerate."
Counterpoint Research forecasts that 5G devices will surpass 57% of total device shipments in the second half of 2024 and exceed 65% by 2025.
#Samsung #5Gmarket #smartphones #Apple #India5G #Xiaomi #global5Gmarket #telecommunications #marketshare #CounterpointResearch #techindustry
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- LG Uplus Seeks Breakthrough in EV Charging, Hwang Hyeon-sik Aims to Overcome EV Fire Phobia
- Hwang Hyeon-sik, CEO of LG Uplus, is focusing on breaking through the growth limitations of the telecommunications business by venturing into the electric vehicle (EV) charging services sector.
A key strength of LG Uplus's EV charging business lies in its ability to collaborate with other LG Group affiliates, such as LG Energy Solution and LG Electronics, to offer comprehensive battery solutions.
However, to achieve visible success, LG Uplus must address consumer fears stemming from EV fire incidents and overcome the temporary stagnation in EV demand, known as the "EV chasm."
As of August 6, 2024, with growth slowing in its traditional telecommunications services like 5G and IPTV, LG Uplus is facing increasing pressure to enhance profitability through new business avenues.
In the first half of 2024, LG Uplus's operating profit decreased by 13.4% year-on-year, with the net increase in 5G subscribers dropping below 10%. Additionally, IPTV subscriber growth has slowed to just over 1%.
Kim Hyun-yong, a researcher at Hyundai Motor Securities, noted, “Both 5G and IPTV, the two main pillars of the telecom industry, have entered a mature phase, leading to stagnation in subscriber and profit growth. With fewer non-telecom revenue sources compared to its competitors, LG Uplus will struggle to show significant growth until the next generation of mobile communications begins.”
Hwang, who was reappointed as CEO last year and has thrived under LG Group Chairman Koo Kwang-mo, is now being hampered by stagnation in the telecommunications sector.
To counter this, Hwang is actively exploring growth opportunities in the EV charging service sector.
In June 2024, LG Uplus launched a joint venture, ‘LG Uplus Bolt Up,’ in partnership with Kakao Mobility. LG Uplus invested KRW 25 billion to secure a 50%+1 share in the venture.
The company has also set a goal to become one of the top three providers in the slow EV charging market by 2027.
The EV charging service market has a bright outlook. According to global consulting firm Roland Berger, the global EV charging service market is expected to grow from US$ 55 billion (KRW 72 trillion) in 2023 to US$ 325 billion (KRW 472 trillion) by 2030.
Domestically, the number of electric vehicles is expected to rise from 390,000 in 2022 to 4.2 million by 2030.
LG Uplus has an advantage through its synergies with other LG Group affiliates. For instance, LG Electronics manufactures EV chargers, while LG Uplus builds charging stations, and LG Energy Solution provides battery diagnostics, creating a comprehensive solution.
However, LG Uplus’s EV charger distribution is still progressing slowly.
By the first half of 2024, LG Uplus had installed 10,700 slow chargers (7kW), far behind leading companies like GS Charge (61,000 units), Everon (38,000 units), and Powercube (36,000 units).
In addition, concerns have been raised that negative perceptions due to recent EV fire incidents and the EV chasm could delay the expansion of the EV charging business.
In response, Hwang is actively introducing EV charging technologies aimed at preventing fires.
Hyun Jun-yong, CEO of LG Uplus Bolt Up, stated in March 2024, “We will ensure that customers considering purchasing EVs do not hesitate due to concerns over inadequate charging infrastructure or safety.”
The company’s charging service platform, ‘Bolt Up,’ is equipped with features that automatically cut off power when abnormal signs such as overheating or overvoltage are detected.
The company is also considering adding cameras to charging stations to allow real-time monitoring of charging situations, as well as incorporating a black box feature to record activity during charging.
Some analysts suggest that the recent EV chasm phenomenon may provide extra time for the infrastructure development that EVs have long needed.
Jung Ji-soo, a researcher at Meritz Securities, commented, “The EV charging service business, part of LG Uplus's non-telecom ventures, received approval from the Fair Trade Commission for its partnership with Kakao Mobility in April and is expected to begin full operations by the end of Q3 2024. This is a positive step toward securing long-term growth drivers.”
#LGUplus #EVcharging #HwangHyeonsik #BoltUp #telecomgrowth #electricvehiclefirephobia #EVchasm #5G #IPTV #LGGroup #newbusiness
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- CJ Olive Young’s "Power Abuse" Controversy Reignited, Threatens Efforts to Address 'Market Dominance Abuse'
- CJ Olive Young has once again been embroiled in a "power abuse" controversy. This comes less than a year after a similar issue led to an investigation by the Korea Fair Trade Commission (KFTC), which had concluded its review.
The situation has become awkward, especially as the company had increased its efforts to resolve previous allegations of "market dominance abuse" by expanding its mutual growth activities.
Some observers suggest that CJ Olive Young, as a dominant player in the offline cosmetics distribution market, may have overreacted to the rise of new online competitors, leading to repeated missteps.
According to sources within the cosmetics distribution industry, both CJ Olive Young and Musinsa, the alleged victim in this case, are busy trying to ascertain the facts and prepare countermeasures.
The controversy centers on allegations that a CJ Olive Young representative pressured purchasing managers of small cosmetics brands working with Musinsa not to participate in an event organized by Musinsa.
The KFTC is reportedly aware of the situation and is reviewing the allegations.
As the facts have yet to be fully confirmed, it remains uncertain whether the KFTC will formally launch an investigation.
However, since Musinsa is reportedly considering raising the issue officially, it is possible that the KFTC may once again focus its attention on CJ Olive Young.
A Musinsa representative stated, “We are looking into whether any issues occurred with the brands and are considering filing a report for business interference.”
The representative added, “We were preparing to open a pop-up store in Seongsu-dong, Seoul, and it is true that some brands unexpectedly canceled their participation, causing delays in our preparations.”
This situation is particularly challenging for CJ Olive Young, as the company had faced a similar issue last year, which led to an investigation by the KFTC.
At that time, the KFTC found that CJ Olive Young had engaged in practices such as △monopolizing promotional events, △failing to revert prices to normal after promotional events, and △unfairly collecting information processing fees. As a result, the KFTC issued corrective orders and imposed a fine of KRW 1.896 billion (US$ 1.37 million).
However, the KFTC did not reach a conclusion regarding the core issue of "market dominance abuse," citing uncertainty about whether CJ Olive Young held a dominant market position at that stage.
Although CJ Olive Young avoided punishment for market dominance abuse, the decision to conclude the review without a final ruling does not equate to a full exoneration, as the KFTC’s decision was based on the difficulty of confirming the facts rather than a determination of innocence.
Given that the KFTC deferred judgment last year, if it decides to investigate this new controversy, it may apply stricter scrutiny to CJ Olive Young.
Since last year's controversy, CJ Olive Young has introduced internal control measures to prevent a recurrence and has actively promoted initiatives supporting small brands. Earlier this year, the company announced a mutual growth plan that would invest approximately KRW 300 billion (US$ 216 million) to support the growth of small brands and develop the K-beauty ecosystem.
CJ Group, on a broader scale, has also supported small brands by providing them with promotional opportunities at international events, aiding their expansion overseas.
However, if the current allegations of power abuse are proven true, much of CJ Olive Young’s efforts could be overshadowed.
A CJ Olive Young representative stated, “We will carefully verify the facts and take necessary actions.”
Some view the recurring power abuse allegations as a sign of increasing pressure on CJ Olive Young. While the company continues to dominate the offline cosmetics distribution market, powerful online competitors are now seeking to enter the cosmetics distribution space.
Last year, allegations of power abuse were linked to CJ Olive Young's efforts to curb Coupang, the leading player in Korea's e-commerce market. The current controversy involves Musinsa, the country’s largest online fashion platform.
#CJOliveYoung #marketdominanceabuse #KoreaFairTradeCommission #KFTC #powerabuse #cosmeticsdistribution #Musinsa #Coupang #Kbeauty #smallbrandssupport #ecommercecompetition #fairtrade
