▲AI PRISM* Customized Economic Briefing
*Editor's Note: 'AI PRISM' (Personalized Report & Insight Summarizing Media) is an "artificial intelligence (AI)-based personalized news recommendation and summarization service" developed with support from the Korea Press Foundation. It selects and provides six customized news items by reader type.
[Key Issue Briefing]
■ Shift in AI Investment Paradigm: Chip stocks plunged as Meta considers entering the cloud business by leasing its own GPUs (graphics processing units) to outside parties. Experts interpreted this not as a scaling back of AI investment, but as a signal that Big Tech's competitive approach is shifting from "how much to buy" to "how efficiently to operate purchased resources to make money."
■ K-Power Equipment Order Streak: As surging power demand from AI data centers coincides with grid overhauls in major countries, major contracts for Korean power equipment companies are coming one after another. HD Hyundai Electric (267260) signed a long-term supply contract worth up to 1.1212 trillion won with a global Big Tech firm, and Hyosung Heavy Industries (298040) added a roughly 310 billion won contract to exclusively supply ultra-high-voltage power equipment to the transmission grid in Victoria state, Australia, over five years.
■ China's Reversal Over Europe: Last month, sales by five Chinese companies in the European market surpassed Japanese cars for the first time ever. As Chinese EV makers such as BYD maintain price competitiveness even after reflecting the EU's tariffs of up to 45.3%, some 10 companies including Xpeng and Nio are also accelerating technological independence by developing their own AI chips for autonomous driving.
[News of Interest to Corporate CEOs]
1. Meta, a Signal of Overinvestment and Slowing Chip Demand?…"No Change in the AI Cycle"
- Key Summary: As Meta considers entering the cloud business by leasing its own GPUs to outside parties, the stock prices of Micron Technology, SK hynix (000660), and Samsung Electronics (005930) all plunged simultaneously. Meta is the only one among the four major hyperscalers (ultra-large cloud operators) without a cloud business, relying solely on advertising while Amazon, Microsoft, and Google recover AI investment costs through third-party sales, and it has signaled capital expenditures (CAPEX) of up to $145 billion this year. The lease targets are known to center on older-generation GPUs such as the A100 and H100, and experts analyze this as a capital efficiency strategy to increase the utilization of already-purchased older assets, separate from demand for the latest Blackwell. Meanwhile, CME Group announced it will launch the world's first "Compute Futures" within this year, signaling the potential for full-scale commercialization of computing resources.
2. K-Power Equipment Rides AI Data Center Boom in Order Streak
- Key Summary: HD Hyundai Electric signed a long-term contract worth up to 1.1212 trillion won to supply distribution equipment and power equipment as a package to a global Big Tech firm, and its new orders in the first quarter of this year reached $1.797 billion, a record high on a quarterly basis. Hyosung Heavy Industries additionally signed a contract worth about 310 billion won with AusNet, the sole transmission grid operator in Victoria state, Australia, to exclusively supply ultra-high-voltage transformers and reactors over five years, and its cumulative North America orders in the first half reached 2.5 trillion won. LS Electric (006260) also saw new orders for North American Big Tech firms this year exceed 1.2 trillion won, already surpassing last year's full-year performance (800 billion won), and it decided to invest 250 billion won to expand its production facility in Utah, U.S. FnGuide (064850) analyzed that the three companies' combined operating profit this year would reach about 2.9947 trillion won, up 38% year-on-year, raising the likelihood of surpassing 3 trillion won in annual operating profit.
3. Chang In-hwa: "We Will Build 'Triple Core' Competitiveness with 17 Trillion Won Investment"
- Key Summary: POSCO Group held its 'CEO Investor Day' at the Conrad Hotel in Yeouido, Seoul, on the 2nd, and presented a goal to build a 'Triple-core' system centered on three pillars—steel, lithium, and energy—to achieve combined revenue of 187 trillion won and operating profit of 13.1 trillion won by 2035. POSCO Group Chairman Chang In-hwa stressed, "Now, when external uncertainties are deepening due to supply chain instability and accelerating low-carbon transition, is precisely the time to create new growth opportunities through bold business portfolio innovation." The 16.7 trillion won to be invested over the next three years was allocated as follows: 7.6 trillion won to strengthen industrial resources such as steel, 4.1 trillion won to secure strategic resources such as lithium, 3.7 trillion won to expand energy value chains such as LNG, and 1.3 trillion won to commercialize physical AI (artificial intelligence that operates in physical environments). The lithium division began full-scale commercial production at a salt lake in Argentina this year and succeeded in turning a profit in March, and it also presented a concrete goal to complete a production system of 173,000 tons per year by 2035 and enter the global top five lithium companies.
[News for Corporate CEOs' Reference]
4. Chinese Cars Overtake Japan in Europe Too…BYD's Surge Eyes First 10 Million in Exports
- Key Summary: Global consulting firm AlixPartners forecast that Chinese auto exports this year will reach about 10 million units, up 41% from 7.1 million last year, and new energy vehicle (electric, hybrid, etc.) exports in January to May this year already surged 110% to 1.83 million units. Sales in Europe last month by five Chinese companies including BYD, SAIC, and Geely reached 138,410 units, surpassing Japanese cars (130,424 units) for the first time, and they are maintaining price competitiveness even though the EU imposes tariffs of up to 45.3%. On the technology side, BYD and Huawei declared they would fully compensate for losses in autonomous driving accidents, and German automakers such as Volkswagen and Audi have come to reversely adopt the software technology of Chinese companies. However, in the domestic market, retail sales in January to May fell 19% year-on-year and average factory utilization stood at just 50%, intensifying cutthroat competition, and AlixPartners predicted that only seven new energy vehicle companies will reach break-even by 2030.
5. Google Loses Final EU Android Antitrust Suit
- Key Summary: The European Court of Justice (ECJ) dismissed the appeal filed by Google and its parent company Alphabet in the Android antitrust case on the 2nd, finalizing a fine of 4.13 billion euros (about 6.3 trillion won). The European Commission ruled in 2018 that Google illegally strengthened its dominance in the search market by requiring smartphone manufacturers to install Google Search and the Chrome browser by default together as a condition for equipping the Play Store, and this ruling, partially reduced by the EU General Court in 2022, was upheld as is this time. Google protested that "the ruling failed to properly recognize the massive investment we have made to keep Android open and free." The Financial Times (FT) assessed that this ruling will serve as a turning point that adds momentum to the European Commission's law enforcement against Big Tech.
6. As China Blocks Tungsten…U.S. Awakens Korean Mine Dormant for 32 Years
- Key Summary: U.S. tungsten specialist Almonty Industries resumed mining at the Sangdong Mine in Yeongwol, Gangwon Province, in March this year for the first time in 32 years, and is expected to jump into the global top-two production tier under a contract to export 2,100 tons of its annual production of 2,600 tons to the U.S. The Sangdong Mine holds 58 million tons of tungsten reserves, the largest for a single mine in the world, and can be mined for about 45 years along tunnels more than 3 kilometers underground. Behind the restart is the large-scale export controls by China, which accounts for 85% of global tungsten production. Tungsten is a strategic mineral essential to advanced industries such as semiconductors, defense, displays, and missiles, and the U.S. will, starting next year, [require] defense companies [to reduce reliance on] Chinese-made [tungsten].
