Category: Korea-Business

South Korea is a much better location than China to be building a Gigafactory. The Chinese government is already meddling in Tesla operations in Shanghai. Tesla would likely be free of such meddling with a South Korea based plant:

President Yoon Suk Yeol met with Tesla CEO Elon Musk on Wednesday and asked for his investment in a gigafactory in South Korea, a presidential official said.

The meeting took place at Musk’s request during Yoon’s state visit to the United States, according to senior presidential secretary for economic affairs Choi Sang-mok.

Yoon said South Korea boasts world-class manufactured robots and an advanced labor force, making it an ideal location to run a gigafactory.

“Should Tesla decide to invest, we will provide active support in terms of location, workforce and taxes,” he was quoted as saying.

Musk responded that he expects to pay a visit to South Korea, saying the country remains an interesting and leading candidate to host a gigafactory, according to Choi.

Yoon also voiced hope for greater cooperation between South Korean businesses and SpaceX, a U.S. spacecraft company headed by Musk, to help foster South Korea’s space industry.

Yonhap

You can read more at the link.

It will be interesting to see how the South Korean government and Samsung react to this request:

Samsung Electronics’ chip plant in Xi’an, China [SAMSUNG ELECTRONICS]

Samsung Electronics and SK hynix should not sell chips to China to make up for the shortfall in supply following China’s sanctioning of Micron, the White House has told the Korean government.    
   
The Financial Times reported Sunday that the Joe Biden administration reached out to Seoul to ask for a cap on the chip sales, although neither government confirmed.  
   
If the Yoon Suk Yeol government acts on the request, the push could exacerbate weaknesses at Samsung Electronics and SK hynix, which have been hit hard as a result of oversupply. 

Joong Ang Ilbo

You can read more at the link.

The IRA may have the intended effect of forcing foreign manufacturers such as Hyundai to increase U.S. based manufacturing and getting rid of their Chinese batteries:

Hyundai Motor Group is facing an uphill battle in the U.S. market for electric vehicles (EV), because its car brands ― Hyundai Motor, Kia and Genesis ― were not included on a list of EVs eligible for up to $7,500 in subsidies granted by the U.S. Inflation Reduction Act (IRA), according to industry officials, Tuesday.

Previously, EVs could qualify for the tax credit as long as they were assembled in North America, but they had to meet stricter battery requirements.

However, detailed guidance measures released last month guarantee only a $3,750 subsidy for EVs that use at least 50 percent of battery components manufactured and assembled in North America, even if the vehicles were assembled in the region. Another $3,750 is available when at least 40 percent of key minerals used in the batteries are mined and processed in the U.S. or its free trade agreement partners.

Under the detailed guidelines of the IRA, EVs manufactured by Hyundai did not make the list. The Electrified GV70, an SUV model of the group’s luxury brand Genesis, was also excluded as it is equipped with Chinese batteries.

In addition to Hyundai Motor Group’s EVs, other brands such as Nissan, which was eligible for the subsidy because it has factories in North America, were also dropped from the list. The eligible cars are made by American brands such as Tesla, Ford, GM and Stellantis.

In response, Hyundai Motor Group said it plans to increase EV production in the U.S. over the long term, aiming to become a leader in the market for such vehicles. The group added it will actively utilize lease sales that qualify for tax credits.

Korea Times

You can read more at the link.

It looks like these Korean corporations will need to determine if having restrictions in the U.S. market is worth partnering with these Chinese firms:

Legal experts in Korea have begun to sound the alarm regarding LG Chem, SK on and POSCO Group, warning them that their joint ventures, established here in Korea with Chinese firms, could be designated as foreign entities of concern under the U.S. Inflation Reduction Act (IRA).

If their warnings turn out to be true, the products of their joint ventures may lose ground in the U.S. market, as they will not be able to enjoy benefits from the country’s subsidy rules.

Last Friday, law firm Kim & Chang said that joint ventures with Chinese companies are likely to be regarded as foreign entities of concern, as the U.S. Infrastructure Investment and Jobs Act defined the term as any foreign entities owned by, controlled by, or subject to the jurisdiction of North Korea, China, Russia and Iran.

“The U.S. will not allow its taxpayers’ money to flow into China,” lawyer Shin Jung-hoon of the nation’s largest law firm said during a conference on countermeasures against the IRA.

Korea Times

You can read more at the link.

I agree with South Korea’s move to increase chip production, but putting these plants within North Korean artillery range around Seoul is not a good idea. These plants are so important they should be built further south out of artillery range:

South Korea will create the world’s largest semiconductor cluster in the Seoul metropolitan area by attracting 300 trillion won (US$229.81 billion) in investments as part of efforts to secure a competitive edge in the sector, the industry ministry said Wednesday.

It is part of the government’s comprehensive plan to promote six key industries — chips, displays, secondary batteries, bio, future vehicles and robots — which also called for the corporate investment of 550 trillion won by 2026, according to the Ministry of Trade, Industry and Energy.

Yonhap

You can read more at the link.

This is a great deal by Ford to get their battery manufacturing facility built in the US by SK:

Rain had wetted much of the clay soil on the ground — rich terracotta earth colors — creating small and large puddles everywhere around a gigantic steel structure, densely embedded with millions of steel beams. 

Yet it was another busy Sunday for many of the 800 engineers and construction workers, who had turned up for work to “get moving” on schedule for the electric vehicle battery manufacturing plants, under construction in Glendale, about 84.5 kilometers south of Louisville in the U.S. state of Kentucky. 

The 6.28 million-square-meter construction site, unveiled to South Korean media on Jan. 8, is where South Korean battery producer SK On Co. and Ford Motor Co. are building what will be the biggest EV battery plants in the United States for such a facility built on a single site. (………..) The project is part of the US$11.4 billion investment the two companies’ joint venture, BlueOval SK (BOSK), announced in September 2021, to build twin EV battery plants in Kentucky and a third one in Tennessee.

Yonhap

You can read more at the link, but I wonder how much of the rare Earth minerals being used in the battery construction is still coming from China?

When I was in Itaewon recently the place did seem far less vibrant than before the accident:

An alley in Itaewon in Yongsan District, central Seoul, near where the deadly crowd crush occurred is empty on the night of Jan. 14. [CHO JUNG-WOO]

The once bustling alleys of Itaewon in central Seoul were deserted on a recent Saturday night. Staffers of pubs and restaurants stood out in the cold encouraging the occasional passerby to come in.  
   
It’s been almost three months since the crowd crush on Oct. 29 took the lives of 158 people, and that of a teen survivor who committed suicide shortly after.     
   
People clearly don’t feel comfortable going back to the area to party, and the pain is only deepening for business owners in Itaewon.   

Joong Ang Ilbo

You can read more at the link.

Some happy chaebol chiefs today in South Korea:

Korea and the United Arab Emirates (UAE) signed a total of 24 agreements worth $6.1 billion in traditional industries, such as energy and defense, as well as emerging businesses, including hydrogen, mobility, bio and digital transformation, according to the Ministry of Trade, Industry and Energy, Monday.

The ministry said about 320 officials from business lobby groups, Samsung Electronics, Hyundai Motor Group and other Korean companies, who accompanied President Yoon Suk Yeol’s state visit to the Middle Eastern country, held the Korea-UAE Business Forum at the Rixos Marina Abu Dhabi hotel.

Korea Times

You can read more at the link.

This is just another example of how Koreans like to keep up with the Joneses:

Koreans were found to have spent the most per capita on high-priced bags and other luxury goods, according to a report by Morgan Stanley. 

The global investment bank said it estimated that Koreans’ total spending on luxury items grew 24 percent to $16.8 billion (208.6 trillion won) in 2022 from a year ago, which is about $325 per person. The per capita figure is far more than the $280 and $55 spent by Americans and Chinese, respectively.

Morgan Stanley analyzed that the high demand for luxury goods among Koreans comes from their increased purchasing power over the years and desire to flaunt their social standing by wealth.

Korea Times

You can read more at the link.

This is another reason why something needs to be done about illegal immigration, to stop the exploitation of children:

At least four major suppliers of Hyundai Motor and sister Kia have employed child labor at Alabama factories in recent years, a Reuters investigation found, and state and federal agencies are probing whether kids have worked at as many as a half dozen additional manufacturers throughout the automakers’ supply chain in the southern U.S. state.

At a plant owned by Hwashin America, a supplier to the two car brands in the south Alabama town of Greenville, a 14-year-old Guatemalan girl worked this May assembling auto body components, according to interviews with her father and law enforcement officials. (……)

Earlier this year, Reuters showed how staffing agencies in rural Alabama recruited undocumented workers from Central America, including minors who had entered the U.S. without parents or guardians, and supplied them to chicken processing plants.

As with those minors, at least some of the children who worked at Hyundai suppliers used false identities and documentation obtained through black-market brokers, sometimes with the help of staffing firms themselves.

Korea Times

You can read more at the link.