The Minute to Read series provides a quick overview of significant events in Korea from the week, conveniently condensed into a one-minute read. Here’s a recap of what happened this week: Feb. 26-29.
Homebuyers hit hard by soaring debt amid high rates
The number of homes being auctioned off due to the inability to repay debts is surging amid high interest rates. Last year, the number of personal non-performing loans (NPLs) purchased by the Korea Asset Management Corporation (KAMCO) from financial institutions secured by apartments nearly quadrupled from the previous year.
The increase in NPL-related housing collateral at KAMCO indicates a rise in homes being auctioned due to failure to repay loans. As the economic downturn and high interest rates continue, financial institutions sell the mortgaged properties to recover the loan amounts if borrowers fail to repay loans secured by housing and other collaterals. Typically, financial institutions transfer debts that have been delinquent for more than three months to NPL agencies like KAMCO to manage asset soundness by selling the debt at a discounted price. KAMCO purchases NPLs through agreements with financial institutions. For NPLs secured by collateral, the principal recovery process is mostly carried out through auctioning. Considering that NPLs are sold not only to KAMCO but also to other NPL companies, it is expected that the number of homes auctioned off due to failure to repay debt could be yearsmuch higher.
Korea Zinc, Young Poong set for historic shareholders’ proxy battle
The Choi and Jang families, owners of Young Poong Group, ranked 28th among South Korea’s business conglomerates, are in conflict over Korea Zinc, a core affiliate, for the first time in about 70 years. Founded by the late Jang Byung-hee and Choi Ki-ho, Young Poong has seen both families owning stakes in the affiliate companies. However, while the Jang family has been managing the electronics affiliates, the Choi family has managed Korea Zinc. Dissatisfied with Korea Zinc’s dividend and paid-in capital increase policies, the Jang family plans to engage in their first-ever proxy battle at a shareholders’ meeting next month.
Coupang posts 1st annual profit since establishment
Coupang achieved its first annual profit since its founding in 2010 last year. According to the earnings report filed with the U.S. Securities and Exchange Commission (SEC) on Feb. 28, Coupang’s annual revenue increased by 20% year-on-year to $24.383 billion last year, while operating income reached $473 million, marking its first operating profit. Coupang recorded an operating loss of $1.49396 billion in 2021 but reduced the deficit to $112.01 million the following year. The company achieved its first quarterly operating profit in the third quarter of 2022 and has remained profitable every quarter since then. Coupang’s Wow membership subscribers increased to 14 million last year, a 27% rise from the previous year.
Zuckerberg meets with Samsung, LG executives during S. Korea visit
Meta CEO Mark Zuckerberg met with executives from LG Electronics and Samsung Electronics to discuss business cooperation in artificial intelligence (AI) and extended reality (XR), marking his first visit to South Korea in 10 years.
On the morning of Feb. 28, LG Electronics and Zuckerberg held a meeting focused on the joint development of XR devices. During the meeting, LG executives tried on Meta’s MR headset, Quest 3, and smart glasses, Ray-Ban Meta, sharing their insights on developing next-generation XR devices. LG also hinted at the potential for collaboration with Meta’s large language model (LLM), LLaMA3 (Large Language Model Meta AI).
In the afternoon of the same day, the Meta CEO discussed AI semiconductor cooperation with Samsung Electronics Chairman Lee Jae-yong and Semiconductor (DS) Division CEO Kyung Kye-hyun. Zuckerberg reportedly believes that Samsung’s semiconductor technology is crucial for Meta’s AI learning and services.
S. Korea’s fertility rate plunges to new record low
South Korea’s total fertility rate fell to 0.72 last year, down 0.06 from the previous year. In the fourth quarter of last year, the fertility rate was 0.65, the first time it fell into the 0.6 range. After reaching a fertility rate of 0.8 in 2020, it declined to the 0.7 range within just two years and is now on the brink of plummeting into the 0.6 range. Statistics Korea forecasts the country’s fertility rate will be around 0.68 this year and decrease to 0.65 next year. Among the 38 OECD countries, South Korea is the sole country with a fertility rate below 1.
Seventeen tops IFPI global album chart for 2023
K-pop boy group Seventeen has topped the International Federation of the Phonographic Industry (IFPI) Global Album Chart for 2023.
According to the global album chart released on Feb. 27 on the IFPI official website, the group’s 10th mini-album, “FML,” was ranked first as the biggest-selling global album of the year. The group achieved the feat by surpassing leading albums on the international stage last year, including Morgan Wallen’s “One Thing at a Time,” and Taylor Swift’s “Midnights” and “1989 (Taylor’s Version).”
Samsung, SK Hynix to resume new DRAM investments
As the DRAM market normalizes, Samsung Electronics and SK Hynix, which have been maintaining a production cut, show signs of resuming equipment investment. In line with the expansion of DRAM production capacity by the two companies dominating 70% of the global DRAM market, expectations are rising for the domestic equipment industry to experience a resurgence in previously scarce orders.
According to industry sources on Feb. 29, new investments are expected to proceed at Samsung Electronics’ fabs, like the Pyeongtaek P3 plant, in the first half of this year to expand production capacity to about 30,000 wafers (semiconductor substrates) per month. In the second half of the year, the equipment introduction will begin in earnest after the completion of the Pyeongtaek P4 plant building. SK Hynix is reportedly relocating its NAND flash production facilities from the M14 fab in Icheon, Gyeonggi Province while introducing 10-nanometer class DRAM facilities to the same site.
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