The Minute to Read (Weekend) 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. 3-7.
South Korea’s preliminary ‘Blue Whale’ drilling fails to prove viability
South Korea’s first attempt to explore oil and gas reserves in the East Sea, known as the “Blue Whale” project, has ended in failure. The government and the Korea National Oil Corporation (KNOC) had planned to drill at least five wells, estimating a 20% success rate, but the initial exploratory drilling yielded no commercially viable deposits. The project, named after the largest of seven promising structures identified for potential development, relied on four key geological factors: reservoir rock, source rock, cap rock, and structural traps. On Feb. 6, the government stated, “Drilling results in the East Sea deep-sea gas field showed signs of gas, but not at a level that would ensure economic viability.” The announcement came months after the government’s claim in June 2024 that deep waters off Yeongil Bay in Pohang could hold reserves valued at five times the market capitalization of leading chipmaker Samsung Electronics, spurring exploration efforts. President Yoon Suk-yeol’s press conference on the discovery faced criticism from opposition parties, who accused him of using the announcement to divert attention from his declining approval ratings.
South Korea bans ‘DeepSeek’ AI in key ministries to safeguard data
South Korea has banned the use of the Chinese artificial intelligence model “DeepSeek” across key government ministries due to concerns about potential leaks of sensitive information. The move is intended to protect confidential data when using generative AI services. According to government officials, the Ministry of Foreign Affairs, Ministry of National Defense, and Ministry of Trade, Industry and Energy imposed the restrictions on Feb. 5. The Defense Ministry stated that it had blocked access to DeepSeek on military internet-connected computers, citing “numerous technical concerns.” Other ministries have reportedly implemented similar restrictions on devices connected to external networks. The ban follows a Feb. 4 directive from the Ministry of the Interior and Safety, which urged central government agencies and 17 provincial governments to exercise caution when using generative AI models such as DeepSeek and ChatGPT. The directive advised against entering personal information and warned against fully trusting AI-generated results.
DeepSeek’s growth pressures South Korea’s leading chipmakers
The swift emergence of Chinese AI startup DeepSeek, known for delivering high-performance AI technology at a lower cost, is reshaping the competitive landscape for South Korean semiconductor leaders SK Hynix and Samsung Electronics. Historically reliant on supplying high-bandwidth memory (HBM) to Nvidia, both companies now face mounting pressure to adjust their strategies. DeepSeek’s breakthrough has disrupted the AI infrastructure market by challenging Nvidia’s dominance. By optimizing software, the company has shown that advanced AI models can run efficiently on lower-performance chips, reducing reliance on Nvidia’s costly high-spec GPUs. This development has deflated what some in the industry describe as an investment “bubble” around Nvidia’s GPU technology.
Industry insiders report that major cloud and tech firms—including Amazon Web Services (AWS), Microsoft, and Meta—plan to expand AI infrastructure investments this year. Some data centers are expected to integrate DeepSeek-R1 to cut costs, as the model operates with lower-spec HBM rather than SK Hynix’s latest HBM3E, which is supplied to Nvidia. For SK Hynix and Samsung Electronics, South Korean chip-making giants, this shift presents short-term risks, as lower demand for high-end GPUs could dampen HBM sales. However, analysts see this as a pivotal moment, emphasizing the need to diversify their customer base and reduce dependence on Nvidia. Calls are growing for a strategic realignment, including forging broader partnerships and adopting customized business strategies to meet evolving industry demands.
Naver founder eyes return as board chairman amid AI push
Lee Hae-jin, 58, the founder of South Korean portal giant Naver, is set to return as chairman of the company’s board, marking his comeback seven years after stepping down to focus on global expansion. Industry analysts view his return as a strategic move to bolster Naver’s artificial intelligence (AI) business. “Lee has been closely following AI advancements in the U.S. and China and sees securing a breakthrough as essential to Naver’s long-term competitiveness,” a tech industry source said. “His decision reflects a sense of urgency to lay the groundwork for the next decade before it’s too late.” According to industry officials on Feb. 4, Naver’s board plans to propose reinstating Lee as an inside director in an upcoming shareholder meeting. If approved in March, he is expected to assume the role of board chairman. “Lee will likely work alongside CEO Choi Soo-yeon and the leadership team to accelerate AI-driven and other future-oriented initiatives,” another industry source said.
South Korean banks cut SME lending under currency pressure
South Korean commercial banks are tightening lending to small and medium-sized enterprises (SMEs) as high exchange rates strain their financial capacity. By January, the combined SME loan balance at the country’s four major banks—KB Kookmin, Shinhan, Hana, and Woori—stood at 541.78 trillion won ($374.2 billion), marking a 2.29 trillion won decline from the previous month. This downturn follows a sharp contraction of 5.02 trillion won in December, signaling a continued pullback in lending into the new year.
The decline is even more pronounced for small business owners, who are among the most vulnerable within the SME sector. In January, total loans to the self-employed across the four banks fell by 9.45 trillion won to 268.51 trillion won ($185.4 billion). While sluggish economic conditions and rising delinquency rates are key factors, financial experts also point to sustained pressure from the high exchange rate. Since December, the won-dollar exchange rate has remained in the 1,400-won range—only the fourth time in history that this threshold has been breached, following the 1997 IMF crisis, the 2008 global financial crisis, and the 2022 U.S. interest rate hike shock.
Costco Korea to raise membership fees by 15% in May
Costco Wholesale, the U.S.-based warehouse retailer, will increase annual membership fees for Costco Korea customers by up to 15% starting in May. The price of a basic Gold Star membership will rise by 11.7%, from 38,500 won ($26) to 43,000 won ($29). The fee hike by Costco’s South Korean subsidiary appears to align with the company’s global pricing strategy. In September 2024, Costco raised membership fees at its U.S. and Canadian stores from $60 to $65. Costco Korea operates as a wholly owned subsidiary of the retail giant. In the latest fiscal year, spanning September 2023 to August 2024, Costco Korea reported 6.53 trillion won ($4.5 billion) in revenue, marking a 7.6% increase from the previous year. Operating profit for the same period rose 15.8% to 218.6 billion won ($150 million).
BLACKPINK announces 2025 comeback with world tour teaser
BLACKPINK has officially announced its long-awaited return with plans for a 2025 world tour, marking the beginning of its next chapter. As one of the most influential acts in global music, the group is expected to make a major impact on the international stage. On Feb. 6, YG Entertainment, which oversees BLACKPINK’s group activities, released a teaser video titled BLACKPINK 2025 WORLD TOUR TEASER on its official blog, providing the first glimpse of the upcoming project. The announcement comes nearly a year and five months after the conclusion of BORN PINK, the group’s last world tour. The teaser captures the electrifying energy of previous performances, showing massive venues illuminated by pink light sticks and BLACKPINK’s commanding presence on stage. It highlights the group’s status as a top-tier girl group before ending with the words “2025 WORLD TOUR,” further building anticipation among fans. Details on the tour’s scale and schedule have yet to be announced, but expectations remain high. YG Entertainment’s executive producer Yang Hyun-suk previously hinted at BLACKPINK’s return, stating that major projects, including the world tour, are progressing as planned—fueling excitement worldwide.
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