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- SPC’s Talent Acquisition Keywords: ‘Management’ and ‘Government Affairs,’ Attracting Former Samsung Affiliates and Presidential Office Veterans
- It appears that SPC Group is focusing on management and government affairs as it puts considerable effort into recruiting external personnel.
Amid the ongoing trial of Chairman Heo Young-in of SPC Group for allegedly pressuring union members to withdraw, there is analysis suggesting that the company is taking bold steps to minimize owner-related risks and foster a positive corporate image.
As of the 15th, when reviewing the external personnel SPC Group has recruited over the past year or two, there is a noticeable trend toward attracting people with backgrounds in the Presidential Office (formerly the Blue House) and from Samsung-affiliated companies.
Im Byung-sun, who has been appointed as co-CEO of SPC Group, comes from Shinsegae Group, which is considered part of the broader Samsung family.
Born in 1962, he has held positions such as Vice President of Shinsegae Department Store Division and CEO of Shinsegae Casa. What stands out is his experience working in Shinsegae Group’s Business Strategy Office.
Since the Business Strategy Office serves as the control tower for the group, it is believed that Im was recruited to review SPC Group’s overall strategy. SPC Group has explained that Im will oversee personnel, legal affairs, external relations, and public relations.
The recruitment of experienced managers also occurred last year. In March 2022, SPC Group appointed Ha Joo-ho, former Vice President of Hotel Shilla, as Head of the Communication Division.
Born in 1964, Ha began his career at Samsung Life Insurance in 1989 and worked for 34 years across various Samsung Group affiliates. He is a public relations expert, having held positions such as Head of Samsung Electronics' PR Group, Head of Everland’s Communication Team, and Head of Hotel Shilla’s Communication Team.
Ha was recruited at a time when SPC Group was facing significant consumer criticism. It seemed that the company wanted to strengthen its external communication by bringing in someone seasoned in PR, and to leverage Ha’s relationships for government affairs.
However, in July of this year, Ha stepped down and was replaced by Lee Sang-eon, a former editorial writer for the JoongAng Ilbo. Lee was appointed while Chairman Heo was under investigation for allegedly pressuring union members to withdraw.
Some speculate that Lee, having worked as a social and legal reporter at JoongAng Ilbo for a long time, was selected due to his connections and information in the legal community. Some Samsung Group insiders also suggested that Ha’s capabilities may not have been fully utilized during Heo’s trial, leading to his resignation.
SPC Group has also actively recruited personnel from the Presidential Office, seemingly as part of its efforts to enhance government affairs.
In July, SPC Group appointed Yeo Sun-woong, a former Senior Administrative Officer at the Presidential Office, as Head of the Strategic Support Office. At the time of his appointment, SPC Group stated, “Yeo will be responsible for government affairs, particularly in relation to the National Assembly.”
Born in 1983, Yeo entered politics when he was elected as a member of the Gangnam District Council in 2014. In 2018, he worked as Head of the New Rules Group at SoCar before joining the Presidential Office in 2019 as a Senior Administrative Officer.
From 2021, Yeo worked as Vice President at the comprehensive proptech company Zigbang before moving to SPC Group.
In August last year, SPC Group also recruited Chun Hyo-jeong, a former Deputy Spokesperson at the Presidential Office, to lead its New Media Office.
Born in 1986, Chun began her career as a reporter for Channel A and later moved to KBS. She served as the first Deputy Spokesperson under the Yoon Seok-yeol administration. Although she applied for a proportional representative position with the People’s Future Party for the 22nd National Assembly elections, she did not make the final list.
Chun, who holds both a master’s and a doctorate in law from Seoul National University, is seen as having strengths not only in government affairs but also in leveraging legal connections.
SPC Group has also focused on utilizing its legal network. In March 2022, the group appointed Kang Sun-hee, an attorney, as its CEO.
Born in 1965, Kang is a former judge who also worked as an administrative officer in the Office of the Senior Secretary for Civil Affairs during the Roh Moo-hyun administration. Kang’s experience spans both the legal field and the Presidential Office.
However, Kang stepped down in March this year after serving just one year. She resigned to support her husband, Kim Jin-mo, a former Deputy Secretary for Civil Affairs at the Blue House, in his campaign for the 22nd National Assembly elections.
The continuous recruitment of personnel from Samsung-affiliated companies and the Presidential Office appears to be related to the controversies surrounding worker deaths and the owner risks faced by SPC Group.
Between October 2022 and August 2023, workers were killed or injured in a series of accidents at SPC Group’s affiliate factories.
In December 2022, the prosecution indicted Chairman Heo on charges of embezzlement, and he was arrested during the process. Heo is currently on trial for allegedly pressuring union members to withdraw and has been released on bail.
With the group’s image deteriorating and the absence of its owner, SPC Group seems to be experiencing a heightened sense of crisis.
In an effort to minimize management risks, strengthen legal and government affairs, rebuild relations with labor unions, and improve consumer perceptions, the retail industry views SPC Group’s aggressive recruitment of personnel with expertise in management and external affairs as a strategic move.
#SPCGroup #HeoYoungin #management #governmentaffairs #Samsungaffiliates #PresidentialOffice #externalrecruitment #legalnetwork #laborunion #corporateimage
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- Samsung Electronics Accelerates Integration of 'Mobile+Home Appliances+AI' in Response to Apple's 'Smart Home' Challenge
- Apple, which does not manufacture home appliances, has thrown down the gauntlet in the 'smart home' market. Known for maintaining a "closed ecosystem," Apple is preparing a new smart home operating system (OS) and related products, signaling a shift from its previous approach.
Samsung Electronics, which has already entered the smart home market, is working to expand its smart home platform ecosystem by integrating its mobile devices, home appliances, and artificial intelligence (AI) into a unified OS. The company is moving quickly to strengthen the connectivity of all its products and secure a dominant position in the market.
On the 14th (local time), Mark Gurman, a Bloomberg analyst, predicted that Apple will prioritize the 'smart home' as its top project over the next two years, developing a new 'home OS' and smart displays.
Apple's entry into the smart home market, where connectivity is key, is considered unusual. This is because Apple has historically focused on a closed ecosystem that opposes openness and external connections, and the company does not produce indoor home appliances.
The closed ecosystem has contributed to Apple's growth by enhancing security, stability, and differentiating itself from competitors. The Wall Street Journal commented, "The closed ecosystem has been the main factor in Apple's success, generating enormous profits."
However, it seems Apple may not be able to avoid opening its ecosystem for the smart home market. As Apple does not manufacture home appliances, an open ecosystem is essential to increase the connectivity of various devices present in the home.
Gurman also pointed to Apple's closed ecosystem as the reason for its struggles with 'home products' like the HomePod and Apple TV. He analyzed, "A closed ecosystem is not an effective strategy in the smart home market, where consumers want their devices to interconnect with various other products."
Apple's shift in direction to target the smart home market is driven by the growth potential of this sector. The smart home market is expected to grow from KRW 165 trillion (US$ 119.0 billion) this year to KRW 860 trillion (US$ 620.0 billion) by 2032.
However, it is expected to take Apple a long time to enter the smart home market. Gurman reported, "Apple has recently formed a 'home ecosystem' team and brought in engineers who had been working on the Apple Car project."
Samsung Electronics, on the other hand, not only operates an open ecosystem based on Google's Android but also produces a wide range of products, from home appliances to mobile devices, already giving it a head start in the smart home market.
At the beginning of this year, Samsung Electronics launched various products for the smart home, including the Galaxy S24 series equipped with Galaxy AI and Bespoke AI home appliances. Recently, it expanded the scope of its platform 'SmartThings,' which connects AI devices, by linking it with IKEA furniture.
The pace of integrating Samsung Electronics' smart home products into a single OS is accelerating faster than expected.
On the 14th, Samsung Electronics applied the 'One UI' update to its TVs, a unified OS that had been expected next year. Additionally, the consumer version of the mobile OS 'One UI 7,' originally anticipated for early next year, is now set to be released by the end of this year.
This announcement comes just 12 days after Samsung Electronics revealed at the 'Samsung Developer Conference 2024' that it would unify all AI products under the 'One UI' OS.
One UI 7 is being developed based on Google's latest OS, Android 15. It is an operating system (OS) and user interface (UI) that integrates artificial intelligence (AI) across Samsung's electronic devices, including smartphones, TVs, refrigerators, and other home appliances.
This One UI integration is expected to be the key to the expansion of Samsung Electronics' smart home ecosystem.
While SmartThings allows integration with products from other companies, Samsung Electronics' home appliance buyers will likely experience more optimized and diverse AI experiences under a single system.
With the recent One UI update for TVs, smartphones and TVs are now connected, allowing smartphones or tablets to be used as keyboards or mice for the TV. In addition, SmartThings for the Internet of Things (IoT) and AI functions can now be conveniently accessed through mobile devices.
#Samsung #Apple #smarthome #artificialintelligence #OneUI #GalaxyAI #homeappliances #SmartThings #mobileOS #AIplatform
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- SKC’s 'Semiconductor Glass Substrate' Commercialization Progresses Smoothly, Park Won-cheol to Kick Off Growth Engine After AMD Certification Next Year
- SKC has successfully stabilized the process for producing its "semiconductor glass substrate," often referred to as the "dream substrate," bringing the company one step closer to commercialization. SKC plans to begin mass production after receiving AMD certification in the first half of 2025, with significant revenue expected to begin in 2026.
All eyes are on CEO Park Won-cheol’s glass substrate business, which is seen as a potential lifeline for SKC as the company struggles with poor performance.
According to the semiconductor industry on the 14th, despite the challenging processes of handling issues like breakage and adhesion, SKC's subsidiary Absolics has stabilized most of the glass substrate manufacturing processes.
From October 6 to 9, Absolics conducted a production line tour at its glass substrate plant in Atlanta, USA.
Yoon Jae-sung, a researcher at Hana Securities, who participated in the tour, said, "While not all processes were revealed, a significant number of processes have entered a stabilized stage, laying the foundation for future mass production of glass substrates."
The Absolics Atlanta plant is currently operating as a small-volume manufacturing (SVM) facility. After completing AMD certification in the first half of 2025, it will transition to a high-volume manufacturing (HVM) facility.
SKC Absolics is reportedly focusing on AMD as its first customer, given their connection through Chiplet.
Chiplet was founded by Brian Black, who worked as a packaging expert at AMD for 20 years. It started as an internal venture at AMD in 2016 and spun off in 2021. SKC acquired a 12% stake in Chiplet in September last year.
Im So-jung, a researcher at Eugene Investment & Securities, stated, “Absolics is in discussions to target AMD as a customer through Chiplet, a company that spun off from AMD and in which SKC has invested.”
Preparations for mass production testing are also underway. ISC, in which SKC invested KRW 520 billion (US$ 374.9 million) to acquire a 45% stake, is expanding its "silicon rubber socket" production plant in Vietnam, which will be used to test the yield of the glass substrate.
On October 8, Han Sung-won, head of SK Group's Hanoi Representative Office, met with Tran Duy Dong, chairman of the People's Committee of Vinh Phuc Province, and requested support for the expansion of ISC’s production facilities, according to the government of Vinh Phuc Province.
ISC manufactures silicon rubber sockets used to determine semiconductor defects. As semiconductor design and manufacturing processes become more advanced, yield becomes increasingly important, and these sockets are essential for conducting repetitive tests in the same environment.
This plant is expected to be used to verify the yield of Absolics' glass substrates. ISC CEO Kim Jeong-ryeol stated in April, “We are preparing to offer ISC’s test solutions when Absolics ships glass substrates.”
A representative from Eugene Investment & Securities predicted that “ISC is likely to collaborate with Absolics, another SKC subsidiary currently developing glass substrates.”
SKC CEO Park Won-cheol is placing significant importance on the semiconductor materials business, including glass substrates.
Despite SKC recording seven consecutive quarters of losses through the second quarter of this year, its semiconductor materials business has shown significant growth. In the second quarter of this year, the semiconductor materials business posted sales of KRW 67.3 billion (US$ 48.5 million) and an operating profit of KRW 15.8 billion (US$ 11.4 million), the only division within SKC to turn a profit.
Glass substrates are expected to be a core part of SKC's future. They are highly regarded as the "dream substrate" and are anticipated to drive innovation in semiconductor packaging for high-bandwidth memory (HBM) and artificial intelligence (AI) semiconductors.
By using glass substrates instead of traditional plastic substrates, semiconductor packaging thickness can be reduced by 25%, power consumption can be lowered by more than 30%, and data processing speed is expected to increase by 40%.
Some experts believe that glass substrate technology could pose a threat even to the world’s largest foundry, TSMC. Georgia Tech Professor Lee Yong-won stated, “Glass substrates are an innovation that could even challenge TSMC’s pride and joy, its 2.5D semiconductor packaging technology, ‘CoWoS’.”
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- LG Electronics Faces Weak Performance Outlook for Q4, Cho Joo-wan Rushes to Expand 'Service and B2B' Revenue
- As global demand for home appliances and electronic devices, including TVs, continues to recover slowly, LG Electronics is seeing a decline in performance, impacted by rising costs in logistics and marketing.
Cho Joo-wan, CEO of LG Electronics, is expected to focus on improving profitability by accelerating structural changes aimed at increasing the revenue proportion from service businesses and business-to-business (B2B) transactions, starting from next year.
According to industry sources on the 14th, LG Electronics' third-quarter operating profit this year significantly fell short of market expectations, with predictions that this downward trend in performance will continue into the fourth quarter.
LG Electronics reported a provisional operating profit of KRW 751.1 billion (US$ 541.7 million) for the third quarter of this year. This figure represents a 20.9% decrease compared to the third quarter of last year and falls far short of the market's expected KRW 1.0154 trillion (US$ 732.2 million).
The continued sluggish demand for TVs and IT devices, along with a more than 50% year-over-year increase in average shipping costs per container during the third quarter, have contributed to this decline. Additionally, the automotive component business has seen both growth and profitability worsen due to weak electric vehicle sales.
Lee Gyu-ha, a researcher at NH Investment & Securities, stated, “Considering the weak demand in advanced markets like the U.S. and the possibility of further downgrades in the performance of subsidiary LG Innotek, fourth-quarter results may also fall short of market expectations.”
As a result, LG Electronics' operating profit margin for the year is expected to remain at 4.3%, similar to last year's level. Revenue growth compared to the previous year is projected to be around 4-5%.
There remains a significant gap between the current performance and the long-term goals set by CEO Cho, which include the "Triple 7" strategy: 7% compound annual growth rate (CAGR), 7% operating profit margin, and a corporate value seven times higher.
To strengthen profitability, CEO Cho is expected to focus on expanding service revenue, such as the home appliance subscription service.
LG Electronics' leading home appliance subscription service is projected to generate KRW 1.8 trillion (US$ 1.3 billion) in revenue this year, a nearly 60% increase compared to last year.
The home appliance subscription business is a model that bundles both hardware and care services, generally achieving an operating profit margin in the low to mid-10% range. Considering that the Home Appliance & Air Solution (H&A) division’s operating profit margin was 6.7% last year, this model offers a clear advantage in terms of profitability.
Currently, LG Electronics operates its home appliance subscription service in Malaysia and Taiwan, and the company plans to target the markets in Thailand and India starting in 2025. As a result, LG Electronics’ subscription service revenue is expected to grow to around KRW 2.4 trillion (US$ 1.7 billion) next year.
An LG Electronics care specialist managing a system air conditioner product. < LG Electronics >
Efforts to shift to a B2B-focused business structure are also accelerating.
The B2B business has the advantage of generating stable and consistent revenue regardless of economic fluctuations, thanks to the trust-based relationships with customers.
Additionally, with larger contract sizes, once a company gets its business on track, it can secure high profitability over the long term.
LG Electronics stands out for its ability to offer customers connectivity and total solutions across various product lines.
An LG Electronics representative stated, “B2B business is not just about hardware specifications or price; our ability to propose tailored solutions to customers is critical,” adding, “The fact that customers can connect and utilize a wide range of LG products is a key differentiating factor.”
LG Electronics is expanding its B2B business into areas such as automotive parts, heating, ventilation, and air conditioning (HVAC), smart factories, electric vehicle charging, and robotics.
The proportion of LG Electronics’ B2B business revenue is expected to grow from 35% in 2023 to 40% this year and reach 45% by 2025.
CEO Cho is expected to present a specific direction for the service and B2B businesses when announcing LG Electronics’ corporate value enhancement plan in the fourth quarter of this year.
At the "Investor Forum" held in August of this year, CEO Cho said, “LG Electronics’ transition to B2B is already rapidly becoming a reality,” adding, “We are pushing for a change to a business structure that can achieve high growth and stable profits, ensuring that LG Electronics receives the proper valuation for its value.”
Keywords: #LGElectronics #ChoJoowan #B2B #subscriptionservice #homeappliance #TVdemand #profitability #revenuegrowth #electronicsindustry #smartfactory
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- [Poll Report] Yoon Suk-yeol's Approval Rating Drops to 10% Range for the First Time, Party Support: Democratic Party 43.5%, People Power Party 26.9%.
- A recent poll revealed that President Yoon Suk-yeol's approval rating has dropped to the 10% range.
In the party support survey, the Democratic Party of Korea (DPK) was found to lead the People Power Party (PPP) by more than double digits.
According to a regular poll released by Poll Flower on the 14th, the positive evaluation of President Yoon Suk-yeol’s handling of state affairs was 19.2%, while the negative evaluation stood at 80.0%.
The negative evaluation was more than four times higher than the positive one. Compared to last week's survey (released on the 7th), the positive rating dropped by 4.5 percentage points, while the negative rating increased by 4.0 percentage points. This is the first time Yoon’s approval rating has fallen into the 10% range since he took office, based on Poll Flower's data.
Regionally, the negative evaluation was higher than the positive one in all areas. Even in the Daegu and North Gyeongsang (TK) region, where conservative support is traditionally strong, 66.3% of respondents had a negative view, more than double the 32.8% who viewed Yoon positively.
Negative evaluations saw significant increases in Seoul (6.5 percentage points) and the Busan, Ulsan, and South Gyeongsang region (6.3 percentage points).
Negative evaluations by region were as follows: Gwangju and Jeolla region at 89.9%, Seoul 81.5%, Daejeon, Sejong, and Chungcheong at 81.2%, Incheon and Gyeonggi 79.8%, and Busan, Ulsan, and South Gyeongsang at 78.9%.
By age group, negative evaluations were higher than positive ones in all age brackets except those over 70. Among those over 70, 50.8% had a negative view while 48.5% viewed Yoon positively.
Negative evaluations by age were as follows: 40s at 93.1%, 30s and 50s at 89.5%, 18–29 at 84.9%, and 60s at 68.1%.
In terms of political ideology, 84.0% of centrist voters, considered a key measure of public sentiment, gave a negative evaluation. Even among conservative voters, 56.9% had a negative view, surpassing the 42.3% positive evaluation by more than 10 percentage points. Among progressive voters, the negative evaluation reached 95.5%.
In the party support survey, the People Power Party stood at 26.9%, while the Democratic Party of Korea registered 43.5%. The gap between the two parties, at 15.6 percentage points, was outside the margin of error. The PPP’s support dropped by 2.1 percentage points compared to last week, while the DPK’s support rose by 1.6 percentage points.
Following the two major parties were the Innovation Party of Korea with 9.4%, the Reform Party with 1.9%, and the Progressive Party with 0.5%. The proportion of undecided voters was 15.9%.
The survey was conducted by Poll Flower on the 11th and 12th of this month, targeting 1,003 men and women aged 18 and older nationwide. The survey was conducted through computer-assisted telephone interviews (CATI) using wireless virtual numbers provided by the three major telecom companies. The margin of error is ±3.1 percentage points at a 95% confidence level.
Weighting by gender, age, and region, based on the Ministry of the Interior and Safety’s resident registration data as of September 30, 2024, was applied. For more details, please refer to the website of the National Election Survey Deliberation Commission.
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- Bank of Korea ‘Pivots’ After 38 Months, Rhee Chang-yong Prioritizes Domestic Recovery Over Housing Prices
- “There has been meaningful progress in the household debt situation.”
Rhee Chang-yong, the Governor of the Bank of Korea, made this remark on the 11th during a press conference following the Monetary Policy Board's decision to lower the base interest rate by 0.25%. He highlighted that changes in the previously concerning trends of household loans were a key factor behind the decision.
This rate cut marks the first by the Bank of Korea in four years and six months since April 2020, and it comes after three years and two months of tightening policies that began with the rate hikes in August 2021.
The decision was influenced significantly by the slowdown in household loans, as both the Governor and the Monetary Policy Board had previously been cautious due to concerns about rising home prices and increased household debt.
In September, the increase in household loans from the five major commercial banks—KB Kookmin, Shinhan, Hana, Woori, and NH NongHyup—was KRW 5.6029 trillion (US$ 4.04 billion), down from KRW 9.6259 trillion (US$ 6.94 billion) in August.
The Monetary Policy Board noted in its policy statement that "the housing market in the metropolitan area has seen a slowdown in price increases and a reduction in transaction volumes, while the downturn in regional areas continues," and as a result, "the growth of household loans has significantly decreased."
The domestic market's growing fatigue after 38 months of tightening policies also played a role in the decision to lower the rate.
The Monetary Policy Board emphasized this shift in its statement, noting that "while exports continue to grow, domestic consumption recovery remains sluggish," signaling a policy shift toward boosting the domestic market.
Governor Rhee acknowledged the need for the rate cut to stimulate the economy, stating, "If the economy were overheating, we would maintain the tightening stance, but domestic demand is still below the potential growth rate," effectively admitting the necessity of the rate cut to support recovery.
Despite this rate cut, it appears unlikely that there will be another reduction during the final Monetary Policy Board meeting of the year in November, due to ongoing concerns about home prices and household debt.
The board stated, "We still need to be cautious about the risks posed by the rate cut on household debt," adding that future policy would closely monitor inflation, growth, and financial stability.
Of the six board members, excluding Governor Rhee, five expressed the view that the current interest rate of 3.25% should be maintained for the next three months to assess whether the trends in housing prices and household debt persist and to evaluate the effects of this rate cut.
As a result, although Governor Rhee has initiated the rate-cutting process, the pace of future cuts is expected to be slow.
Market analysts predict that the rate will likely remain unchanged in the November meeting, with further cuts possible in the first half of next year.
Ahn Ye-ha, a researcher at Kiwoom Securities, stated, "The rate will likely be frozen in November, but expectations for further cuts will remain high given the heightened uncertainty surrounding the economy," adding that "there is a high possibility of one additional cut each in the first and second quarters of next year."
Cho Yong-gu, a researcher at Shin Young Securities, commented, "Based on the three-month forward guidance, no additional cuts are expected until January next year," predicting that "the next cut will likely occur in February, with another one in the third quarter, bringing the rate down to 2.75% by the end of next year."
#RheeChangyong #BankofKorea #interestratecut #householddebt #MonetaryPolicyBoard #KoreanEconomy #ratecutdecision #economicpolicy #domesticmarket #financialstability #marketforecast #interestrate
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- KT Under Kim Young-shub Implements First Voluntary Retirement, Establishes Network Subsidiaries
- KT is set to implement its first voluntary retirement program since Kim Young-shub assumed the role of CEO.
The company is also moving forward with plans to establish a subsidiary specializing in network operations, transferring related organizations and personnel.
According to reports from the telecommunications industry on the 11th, KT has decided to create two new subsidiaries, KTOSP and KTP&M (tentative name), to which it will transfer its network maintenance and installation-related departments.
KTOSP, which will be established with an investment of KRW 61 billion (approximately US$ 44 million), will be responsible for designing and constructing telecommunication facilities such as lines, and it is expected to employ around 3,400 people.
KTP&M, with an investment of KRW 10 billion (approximately US$ 7.2 million), will focus on designing power facilities within the main network centers and is expected to have around 380 employees.
Additionally, about 170 employees from customer service centers will be reassigned to either KTIS or KTCS.
The new subsidiaries will be officially established following a board resolution on the 15th, with the legal incorporation set for January 1, 2025.
KT plans to offer a special voluntary retirement option to employees who do not wish to transfer to the new subsidiaries or other existing group companies. The voluntary retirement package will range from 165% to 208.3% of their severance pay, depending on their years of service.
It has been reported that the maximum severance package for voluntary retirees could exceed KRW 300 million (approximately US$ 216,400).
The personnel restructuring resulting from the creation of the new subsidiaries and the voluntary retirement program is expected to affect up to 5,700 employees out of KT’s total workforce of around 18,000.
A KT representative commented, "No final decisions have been made yet."
#KT #KimYoungshub #voluntaryretirement #telecommunications #subsidiaryformation #personnelrestructuring #KTOSP #KTP&M #networkoperations #severancepackage #telecomindustry
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- "Despite Foundry Losses, No Spin-Off for Samsung Electronics; Jun Young-hyun Focuses on Turnaround Strategy"
- Samsung Electronics is seeking a breakthrough to reverse its fortunes in the foundry (semiconductor contract manufacturing) business, despite reporting significant operating losses in the trillions of won and dismissing the possibility of spinning off the division.
Jun Young-hyun, the Vice Chairman and Head of the Device Solutions (DS) Division at Samsung Electronics, is expected to focus on securing profitability in the 4-5nm processes, where yields (the ratio of finished products) have somewhat stabilized. He is also aiming for a turnaround in the foundry business by betting on the 2nm process next year, with plans to strengthen the company's technological competitiveness and close the gap with industry leader TSMC.
According to the semiconductor industry, Samsung’s foundry division is not expected to escape the ‘profitability trap’ in the second half of this year, prompting the need to adjust its existing strategy. Samsung's foundry division reportedly posted an estimated operating loss of about KRW 2 trillion (US$ 1.44 billion) in 2023, and cumulative losses for the first three quarters of this year have already exceeded KRW 2 trillion (US$ 1.44 billion).
In contrast, competitor TSMC has reaped significant benefits from the surge in demand for AI semiconductors, with its Q3 2023 sales rising by 36.5% year-over-year to KRW 31.7 trillion (US$ 22.9 billion).
However, Samsung Electronics Chairman Lee Jae-yong has made it clear that there are no plans to spin off the foundry business, stating, "We are not interested in spinning off. We are eager to grow the business," indicating his determination to seek a recovery.
Samsung has historically pursued a strategy of securing production capacity (capability) first and then attracting customers, unlike TSMC. However, problems with yield rates have caused Samsung to lose major clients, leading to the need to adjust the pace of its capital investments.
The company recently delayed the operation of its new foundry plant in Taylor, Texas, from 2025 to 2026, and it is reportedly converting parts of its foundry lines at the Pyeongtaek plant to memory production. Additionally, some of Samsung’s foundry R&D personnel are reportedly being reassigned to memory semiconductor projects.
Vice Chairman Jun is currently conducting a management review of the foundry business, and a large-scale reorganization is expected based on the results later this year.
To achieve profitability in the foundry business by 2025, Samsung is expected to focus on securing large semiconductor customers like Nvidia and AMD, primarily through its 4-5nm process, which has shown some yield stabilization.
While Nvidia and AMD are expected to continue relying heavily on TSMC for high-performance AI semiconductors next year, Samsung may find opportunities in the mid-range AI semiconductor product category.
Samsung's 3nm yield reportedly remains below 50%, but the 4nm yield has exceeded 70% this year.
Song Myung-seop, a researcher at Hi Investment & Securities, noted, "In the non-memory (system semiconductor) sector, 3nm production issues are expected to persist. However, with yield improvements and customer expansion in 4nm, performance should gradually improve."
Samsung Electronics is scheduled to host the 'Samsung Foundry Forum 2024' online on October 24 in Beijing, Tokyo, and Munich, signaling a full-scale effort to attract large customers.
In the 3nm space, Samsung is expected to focus on stabilizing yields rather than immediate profitability. Without securing a stable yield, large clients may lose confidence and leave even if they are initially attracted.
Unlike memory, foundry operations require firm commitments and trust from customers, a relationship that Samsung has struggled with in the past. However, it is expected to continue significant investments in advanced technology development.
In the 2nm space, Samsung is using AI to optimize process design, aiming to reduce leakage power by more than 10%. The company is also considering introducing 'backside power delivery' (BSPDN) technology, which supplies power through the back of the chip, improving both data and power transmission efficiency.
On October 8, Vice Chairman Jun posted an apology to customers, investors, and employees, stating, "Above all, we will restore the fundamental competitiveness of our technology. This is Samsung Electronics' pride, and we will never compromise on it."
#Samsung #foundry #semiconductors #JunYounghyun #TSMC #AIsemiconductors #4nm #2nm #Nvidia #AMD #profitability #yieldimprovement #BSPDN #LeeJaeyong #SamsungFoundryForum #technologicalcompetitiveness
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- Kim Seung-yeon "we will overcome crises and write the 100-year history of Hanwha."
- Hanwha Group Chairman Kim Seung-yeon emphasized the importance of crisis response as the company aims to become a "100-year enterprise."
In a speech delivered via an internal broadcast on the morning of the 10th to commemorate the 72nd anniversary of the company’s founding, Chairman Kim stated, "With unwavering belief and relentless determination to achieve excellence, we will overcome the waves of crisis and write a new chapter in the 100-year history of Hanwha."
Chairman Kim emphasized the expansion of successful experiences as a way to overcome crises.
He pointed out, "In this harsh environment, where a moment of hesitation can lead to permanent downfall, all companies are facing significant difficulties."
Particularly, he highlighted the achievements in the defense sector, such as Hanwha Aerospace and Hanwha Systems, as results that reflect the company’s belief and the history of its persistent challenges.
However, he also stressed the need to avoid complacency over temporary successes driven by geopolitical issues. He urged a renewed focus on research, development, and localization strategies to further pioneer new markets from the ground up.
For the shipbuilding and marine divisions, including Hanwha Ocean and Hanwha Engine, he encouraged them to leave a greater mark of success by pursuing the goal of becoming global leaders in the marine industry.
Regarding struggling sectors such as petrochemicals and energy, Kim offered candid criticism.
"We must critically examine whether we have become complacent with small successes and whether we have been insensitive to market changes," he said. "Rather than passively waiting for market shifts, we must quickly develop the capacity to lead the market through painful but necessary innovation."
Kim also called for heightened attention to workplace safety.
"Every member of the Hanwha family has the right to work in a safe and healthy environment, and we must always prioritize this," he stated. "Success built on someone's sacrifice is not true success."
He further emphasized the importance of ethics and compliance culture, stating, "We must continue to uphold stricter ethical standards and compliance culture. We must not forget that each Hanwha employee's commitment to ethics and compliance is the foundation of the trust others place in our group."
#Hanwha #KimSeungyeon #crisisresponse #100yearenterprise #corporateleadership #defenseindustry #innovation #workplacesafety #ethicsandcompliance #business