▲ AI PRISM* Personalized Economic Briefing
* Editor’s note: AI PRISM (Personalized Report & Insight Summarizing Media) is an AI-based personalized news recommendation and summary service developed with support from the Korea Press Foundation. It selects and provides six tailored news items by reader type.
■ Memory Supply Warning: SK Group Chairman Chey Tae-won signaled his intent to build a memory chip front-end (wafer fabrication) facility in the United States, while forecasting that the global memory market will face its worst-ever supply imbalance next year. Chey also expressed concern over “chipflation,” in which rising chip prices spread to higher prices for finished products. He explained that in the AI era, a structural shift is emerging in which a single user employs more than 10 AI agents, causing memory demand to grow exponentially.
■ Growth-Employment Gap: China’s advanced manufacturing has a production-inducement coefficient of 3.6 to 3.8, far above the 2.6 for real estate and construction. But because construction requires 2.2 times as many workers as manufacturing for output of the same scale, advanced industries have not replaced the jobs left behind by real estate. Similar warning signs are appearing in South Korea, where a slowdown in property transactions is weakening a key source of local government revenue, and where growth in the number of employed people in the first half of this year fell short of even half the original forecast.
■ Physical AI Alliance: The AI alliance forged by LG (003550) Chairman Kwang-mo Koo and Nvidia CEO Jensen Huang centers on pursuing joint businesses across three areas: robotics, AI factories and mobility. The two companies have also formed a joint task force to accelerate everything from research and development to on-site validation and commercialization, targeting the standards of the physical AI industry as it expands beyond data centers into the real world.
1. Chey: “Reviewing U.S. Front-End Fab… Worst Supply Imbalance Next Year”
– Summary: SK Group Chairman Chey Tae-won officially signaled his intent to build a memory chip front-end production facility in the United States. In an interview released by the U.S. business network CNBC on the 13th, Chey said when asked about additional construction plans that he was willing to do so but that finding a suitable site was truly difficult. SK hynix (000660) is currently building an advanced packaging plant in West Lafayette, Indiana, with an investment of $3.87 billion (about 5.4 trillion won). However, SK hynix is carefully reviewing front-end investment in light of the surging construction costs and infrastructure bottlenecks that competitors such as Taiwan’s TSMC and U.S.-based Micron face locally. SK hynix also plans to reshape its cooperation with Big Tech from simple chip sales into long-term partnerships centered on customized HBM (high-bandwidth memory), and to reduce downturn risk by expanding long-term agreements (LTAs) and introducing memory-as-a-service.
2. China’s Push to Deflate Property Bubble Saps Demand; Korea’s Jobs Hit First
– Summary: China’s advanced manufacturing quickly filled the growth gap left by real estate, but it did not replace the jobs. According to the Bank of Korea, China’s advanced manufacturing has a production-inducement coefficient of 3.6 to 3.8, far above the 2.6 for real estate and construction. But for output of the same scale, construction required 2.2 times as many workers as manufacturing, and real estate 1.5 times. With about 50% of household assets tied up in real estate, a reverse wealth effect from price corrections has compounded the problem, and consumption has failed to recover. The consumer confidence index plunged to 86.7 in April 2022 and had not regained the baseline of 100 as of last year. In South Korea as well, acquisition tax in Gyeonggi Province fell 25.9% from four years earlier, and according to the Korea Labor Institute, growth in the number of employed people in the first half of this year was 108,000, short of even half the forecast of 220,000, while the number of employed people in manufacturing fell by 62,000.
3. “Joint TF for Development, Validation and Commercialization”… ‘M-A-P’ Three-Pronged Formation Takes Off
– Summary: LG and Nvidia are pursuing joint businesses in earnest across three areas: robotics, AI factories and mobility. The first area to show results will be humanoid robots. LG is developing a bipedal reference robot using Nvidia’s humanoid foundation model Isaac GR00T, with a target of unveiling it in the first quarter of next year, with Jetson Thor serving as the brain. LG will also deploy its wheelbase-type CLOi robots on a washing machine production line at its U.S. plant in Tennessee within this year for validation, and plans to complete an 80-megawatt (MW) AI factory in Cheonan, South Chungcheong Province, in the first half of 2028. In mobility, the two will combine Nvidia’s DRIVE Hyperion with LG’s in-vehicle infotainment (IVI) capabilities to develop a high-performance computing platform for AI-defined vehicles (AIDVs), and the industry reads the relationship between the two companies as having evolved into joint business partners.
4. Samsung Electronics Tops 55 Trillion Won in H1 R&D and Capex; SK hynix Diversifies Big Tech Customers
– Summary: Samsung Electronics (005930) invested a record of more than 55 trillion won in research and development (R&D) and facilities in the first half of this year. According to a semiannual report disclosed on the 14th, first-half R&D spending was 27.3627 trillion won, up about 9.3 trillion won from 18.0641 trillion won a year earlier, while facility investment rose 4.9 trillion won to 28 trillion won. As a result, its DRAM market share rose 5.4 percentage points to 39.4% in the first half from 34.0% last year, while its smartphone share was 22.0% and its TV share was 30.6%. However, Samsung’s first-half raw material purchases rose to 55.8338 trillion won, and in the Device eXperience (DX) division, memory prices for mobile devices surged 211% from the annual average last year, increasing cost pressure. Meanwhile, SK hynix’s first-half revenue from Nvidia was 17.6087 trillion won, or 13.35% of the total, sharply lower than the 24% of last year’s annual revenue.
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