Korean Chaebols Reshape Portfolios Toward AI and Semiconductors
Korean conglomerates, also known as Chaebols, are undergoing a significant transformation in their business portfolios, shifting their focus towards high-value industries such as artificial intelligence and semiconductors. As reported by the Fair Trade Commission on August 14, the number of affiliated companies belonging to 102 large business groups with assets of 5 trillion won (approximately $3.52 billion) or more has decreased by four, from 3,538 on May 1 to 3,534 on August 3. This change is a result of the conglomerates' efforts to streamline their portfolios and concentrate on core businesses.
Business Portfolio Changes
During the three-month investigation period, 49 business groups made changes to their affiliated companies, with 35 groups establishing or acquiring stakes in 75 new companies, while 28 groups excluded 79 companies from their affiliations due to mergers, acquisitions, or liquidation. Hyosung led the way in new incorporations, adding 11 companies to its portfolio, followed by GS and Daemyung Chemical with nine and seven new companies, respectively. On the other hand, DB recorded the highest number of affiliation exclusions, with 13 companies, followed by Hyosung with eight and SK with seven. This shift in portfolio composition is a strategic move to enhance competitiveness and secure a foothold in emerging industries.
Major companies are streamlining their portfolios by eliminating non-core businesses that are struggling with low profitability or are not aligned with their core competencies. For example, SK excluded five companies from its affiliation, including the real estate development company SK D&D, while CJ cleared out two companies, including the animal feed manufacturer CJ Feed&Care. Wonik also optimized its business portfolio by excluding three companies, including the film production company Pladi. This strategic move is aimed at concentrating resources on high-growth areas and enhancing overall competitiveness. By focusing on core businesses, conglomerates can allocate resources more efficiently and drive growth in key sectors.
Emerging Sectors Investment
In contrast, many conglomerates are actively incorporating new companies in emerging sectors, particularly those related to AI data centers and semiconductors. Samsung, for instance, has welcomed the public-private joint venture Korea AI Computing Center and the cooling and air conditioning solution company FlaktGroup Korea as its affiliates. GS has incorporated four companies, including GS AI Infra, while OCI has added SGC Data Power and SGC AI Infra to its portfolio, laying the foundation for its AI infrastructure business. These investments demonstrate the conglomerates' commitment to securing a foothold in future growth engines. The move towards AI and semiconductors is a strategic decision to stay ahead of the curve and capitalize on the growing demand for these technologies.
The manufacturing sector is also witnessing significant movements, with companies seeking to acquire high-value technologies. Hansol has acquired Will Technology, a semiconductor inspection parts manufacturing company, while Hyosung has established and included HS Hyosung Energy Solution Korea, a silicon anode material manufacturing company, in its affiliation. This strategic move is seen as an effort to overcome the limitations of existing core businesses and strengthen competitiveness in the next-generation energy and semiconductor markets. By reshaping their portfolios and investing in emerging technologies, Korean Chaebols are poised to drive growth and innovation in the years to come. As the industry continues to evolve, it will be interesting to see how these conglomerates adapt and thrive in the new landscape.
Source: SaaS & Technology · https://www.businesskorea.co.kr/news/articleView.html?idxno=274894