China Speeds Up Grip on Europe's EV Supply Chain, Targeting Germany

* 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 news items tailored to each reader type.

1. China Swallows European Carmakers That Delayed Innovation, Boosting Supply Chain Investment 2.5-Fold

- Key Summary: China's investment in Europe's EV supply chain surged 2.45-fold from 2.9 billion euros (about 4 trillion won) in 2022 to 7.1 billion euros (11 trillion won) in 2025, according to consulting firm Rhodium Group. Chinese mergers and acquisitions (M&A) of individual European automakers also rose from four to nine over the same period, and last year six of the nine deals took place in Germany, with 83% of the deal value concentrated there.

Behind China's move to acquire parts makers are European Union (EU) rules seeking to mandate the use of European-made parts and labor; by acquiring small and mid-sized parts makers, Chinese firms can clear local-sourcing rules at low cost. Volkswagen, by contrast, pushed to cut up to 100,000 jobs and close factories but was blocked by laws that make restructuring impossible without the consent of labor unions and the state of Lower Saxony. Some plants of Volkswagen, Stellantis and France's Renault are effectively idle, with operating rates of just 17% to 28%.

2. Solving the AI Power Crunch and Securing Quantum, Space and Bio, the Government Takes Equity to Share the Risk

- Key Summary: The "7 SEED Projects" announced by the government on the 12th are made up of three clean-energy fields, three frontier-technology fields and one supply-chain field that underpins them. According to the 11th Basic Plan for Electricity Supply and Demand, peak domestic power demand is projected to rise from 98.3 gigawatts (GW) in 2023 to 129.3 GW in 2038, with data center demand alone reaching 6.2 GW. The government has set a goal of starting detailed SMR design in 2027 and commercializing an innovative light-water SMR (i-SMR) in 2035.

In the frontier fields, the plan calls for securing a domestic 100-qubit-class quantum processor (QPU) capable of error correction by 2029, launching the country's first lunar lander in 2030, and commercializing brain-computer interface (BCI) products in 2035. It also aims to raise the recycling rate of 10 key minerals to 20% by 2030, expand stockpiles to as much as 365 days' worth, and invest 10 trillion won in R&D over five years in advanced materials, parts and equipment.

3. Hyundai Motor Group's Company-Wide AI Transformation: "Chairman Euisun Chung Also Learned Coding"

- Key Summary: Jin Eun-sook, president in charge of ICT at Hyundai Motor and Kia (000270.KS), said at the "Hyundai Motor Group AX Results Presentation" held at the Yangjae headquarters in Seocho-gu, Seoul, on the 12th that the group's goal is not to become the company that uses AI the most, but the one that uses it best. This year, group C-level executives including Chairman Euisun Chung learned vibe coding, in which generative AI writes code when requirements are described in natural language. Chung volunteered for the training, reasoning that management must understand the technology to make the right decisions. A "crash safety AI assistant" cut case-search time by about 90%. An "AI automated recognition service" that matches vehicle identification numbers (VINs) in real time saved 5.24 billion won a year at global plants, and technology to optimize bogie alignment cut unnecessary production stoppage time by about 86%.

4. Half-Year Revenue Hits 1 Trillion Won: AIDC Becomes a Cash Cow for the Three Telecoms

- Key Summary: South Korea's three mobile carriers are estimated to have earned 1.0216 trillion won in revenue from AI data center (AIDC) businesses in the first half of this year, up about 29% from a year earlier. SK Telecom's first-half AIDC revenue rose about 91% to 267.6 billion won, LG Uplus rose about 30% to 238.5 billion won, and KT Cloud posted 515.5 billion won. Behind the revenue growth is rising utilization. SK Telecom's utilization rate approached 100% after it acquired the Pangyo IDC, and LG Uplus's Pyeongchon Mega Center posted 98% in its first year of operation. AIDCs have high power density and require high-performance power and cooling facilities, making initial investment enormous, so the three telecoms are expanding capacity in stages while confirming real demand. SK Telecom is easing the investment burden through project financing (PF) and outside investment, and LG Uplus through pre-completion sales.

5. "Inflation Is the Bigger Problem": Hawkish Voices Grow at the Fed

- Key Summary: Even though the U.S. labor market deteriorated sharply last month, Federal Reserve officials have issued a string of remarks that inflation is the more serious problem. Chicago Federal Reserve Bank President Austan Goolsbee said the biggest problem now is not a collapse of industries and jobs but prices and living costs rising too fast. Cleveland Fed President Beth Hammack diagnosed that a single move of 0.25 percentage point does not have a big effect on the economy, saying multiple moves are needed. As a result, the market is also unable to gauge the direction. On the Chicago Mercantile Exchange (CME) FedWatch tool, the probability of a hold at the September Federal Open Market Committee (FOMC) meeting stood at 50.1% and the probability of a 0.25-percentage-point hike at 49.9%, almost even.

6. Even After 12 Straight Profitable Quarters, KEPCO Can't Smile: Q2 Standalone Operating Profit Plunges 96%

- Key Summary: Korea Electric Power Corporation's second-quarter operating profit on a standalone basis came to just 36.1 billion won, plunging to 4% of the 956.6 billion won posted in the same period last year. On a consolidated basis, second-quarter operating profit was 1.1286 trillion won, half of the 2.1395 trillion won in the second quarter last year and far below market expectations of around 2 trillion won. A joint rise in liquefied natural gas (LNG) and bituminous coal prices, driven by the U.S.-Iran war, dragged down earnings. The Japan Korea Marker (JKM) price per million Btu (British thermal units) more than doubled from around $10 last year to $21.19 on the 11th, and the average price of bituminous coal also rose about 25% this year. In August, the daily average system marginal price (SMP) has continued to exceed the break-even point of 146 won per kWh. This is why some say the company faces a financial emergency despite 12 consecutive quarters of profit. As of the second-quarter close, debt stood at 210.7 trillion won and daily average interest costs at 11.5 billion won.