South Korea

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Kakao Accelerates Corporate Streamlining and AI-Centric Reforms Amid Governance and Market Challenges

Oct. 14, 2025 | Firms

Kakao is overhauling its corporate structure and technological strategy to enhance governance, streamline operations and drive growth.

**Kakao cut its group affiliates by roughly 30 percent over two years, reducing the number from 142 in September 2023 to 99 as of October 2025.**
Under CEO Chung Shin-a’s leadership, the company aims to shrink its affiliate count further to about 80 by year-end. This consolidation supports a broader strategy to strengthen governance, improve operational efficiency and concentrate resources on core business areas.

**Alongside the affiliate reduction, Kakao has implemented governance and operational reforms in response to criticism over unfair business practices and executive misconduct.**
Regulators fined Kakao Mobility for allegedly inflating sales figures and abusing its market position in ride-hailing, and founder Kim Beom-su faced indictment for alleged stock-price manipulation linked to Kakao Entertainment’s acquisition of SM Entertainment. At the same time, a major redesign of KakaoTalk triggered strong user backlash, prompting the company to roll back Instagram-style feeds and reinforce transparent, responsive communication with its user base.

**Despite broader economic headwinds, Kakao reported an operating profit of 185.9 billion won in the second quarter of 2025—a 39 percent increase year on year and its highest quarterly profit on record.**
Steady growth on the KakaoTalk platform, improved profitability across its remaining affiliates and deliberate efforts to build a stable financial structure independent of one-off gains all contributed to this performance.

**Looking ahead, Kakao plans to place artificial intelligence at the center of its growth strategy.**
By the end of October 2025, the company will launch “ChatGPT for Kakao,” developed in partnership with OpenAI, allowing users to access ChatGPT directly within the KakaoTalk interface. It will also introduce “Kanana in KakaoTalk,” an on-device AI feature that runs lightweight models locally on smartphones. Additional AI ecosystem efforts include the Context Protocol (MCP) and an agentic AI platform designed to connect external services, all intended to deliver personalized AI experiences to more than 50 million users.

**To support these strategic and technological initiatives, Kakao expanded its total shareholder return–linked compensation program to include all executives and established a five-year, 50 billion won AI education program in collaboration with leading Korean science and technology institutes.**
The company also launched a Small Business Integrated Support Task Force to provide customized consulting for small business owners, reflecting its commitment to responsible management and stakeholder engagement.

Pentagon Launches $1 Billion Mineral Stockpile Drive Amid Supply Chain Concerns

Oct. 14, 2025 | Energy & Natural Resources

The US Department of Defense is expanding its reserves of essential minerals to strengthen national defense capabilities.

**The Defense Logistics Agency has launched a procurement initiative of up to $1 billion to build strategic stockpiles of critical minerals for defense applications.**
It plans to purchase $500 million of cobalt, $245 million of antimony, $100 million of tantalum, and $45 million of scandium. The agency is also exploring acquisitions of rare earth elements, tungsten, bismuth, and indium, with some of those metals included for the first time under this program.

**These minerals serve as vital components in advanced weaponry, radar installations, and missile detection and guidance systems.**
As of 2023, the DLA’s existing inventory stood at approximately $1.3 billion in mineral assets. This new procurement push stems from provisions in the Trump administration’s tax-cut legislation (the Bipartisan Budget Act), which allocates $7.5 billion for critical mineral initiatives: $2 billion for Department of Defense stockpiling between late 2026 and early 2027, $5 billion for broader domestic supply chain investments, and $500 million for a credit facility to spur private‐sector participation.

**A key driver of the initiative is concern over China’s dominance in critical mineral markets and its recent tightening of export controls.**
The Pentagon aims to reduce reliance on a single supplier and improve resilience in its supply chains. Legal and policy analysts warn that any delays or shortfalls in securing these materials could leave gaps in the production and deployment of key defense systems, and they note that the sheer scale of the proposed acquisitions presents significant logistical and financial challenges.

**Market analysts question the feasibility of meeting these targets within the proposed timeframe.**
For example, the planned purchase of 222 tonnes of indium nearly equals US annual consumption of roughly 250 tonnes, and many of the quantities exceed current domestic production and import levels. Observers also caution that large‐scale government buying could drive global mineral prices higher, creating volatility that may complicate procurement for both defense and commercial users if producers cannot rapidly scale output.

Monitored Intelligence for South Korea - Oct. 15, 2025

News
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313

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11

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40

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2

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0

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1

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0

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0

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0

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2

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Minister objects to any 'unfair' tariff deal with U.S.

Yonhap | English | News | Oct. 15, 2025 | Regulation

South Korea's government is actively negotiating with the United States to protect national interests in tariff discussions and will reject any "unfair" agreement, according to Policy Coordination Minister Yoon Chang-yul. These talks stem from a July agreement where South Korea committed to investing US$350 billion in the U.S. in exchange for reducing reciprocal tariffs from 25 percent to 15 percent, but the tariff reduction has not yet been implemented.

Minister Yoon emphasized the importance of concluding the negotiations quickly while ensuring that any deal does not compromise South Korea's interests or impose unbearable conditions. He noted uncertainty about the outcome of the talks but pointed out that other countries are facing similar challenges with the U.S.

To mitigate long-term negative effects on domestic industries and regions, the South Korean government plans to implement protective measures. The negotiations continue amid growing trade uncertainties, with key government officials engaged in ongoing discussions to reach a fair accord.

산업 전환기 맞은 韓中 …'데이터'라는 공통언어로 돌파구 찾아야

Korea and China Facing Industrial Transition… Need to Find Breakthrough with the Common Language of Data

Maekyung | Local Language | News | Oct. 15, 2025 | UndeterminedTech Development/Adoption

The "2025 Korea-China Media Cooperation Forum" held on October 13 at the Lotte Hotel in Seoul brought together industry leaders from Korea and China to discuss cooperation amid an era of significant industrial transition driven by artificial intelligence (AI), robotics, and data. The forum emphasized the importance of leveraging technological advances, cultural exchange, and the shared accumulation of data to support industrial innovation and social change. The event took place ahead of the upcoming Asia-Pacific Economic Cooperation (APEC) leaders' meeting in Gyeongju.

Participants highlighted the rapid transformation in various sectors, particularly travel and robotics, underscoring the need for bilateral collaboration. Korean and Chinese entrepreneurs shared insights on ecosystem-centered innovation enabled by AI and data. For example, in the travel industry, expansion of group visa-free travel from China has generated a large volume of shared data reflecting Korean and Chinese tourism experiences, which can be used to develop customized tourism content. Social networking platforms like China's Xiaohongshu facilitate cultural exchange through user-generated content, building emotional connections between the two countries.

Leaders also discussed the broader implications of robotics and AI, including the popularization of robots as a service (RaaS) for small and medium-sized enterprises and the development of "embodied intelligence," where robots learn and evolve independently through real-world interaction. A public opinion survey highlighted strong regional support for openness and cooperation in the Asia-Pacific, with 70% of respondents endorsing a "dynamic and harmonious Asia-Pacific community" and over 80% willing to engage in job and education exchanges. The forum concluded that strategic cooperation based on shared data and technological synergy offers a pathway to converting challenges of industrial transition into opportunities for both nations.

S. Korea seeks to reinstate office exclusively in charge of inter-Korean dialogue

Yonhap | English | News | Oct. 15, 2025 | Geopolitical Conflict and Disputes

South Korea's unification ministry will reinstate an office exclusively dedicated to inter-Korean dialogue as part of efforts to resume communication and promote peace with North Korea under President Lee Jae Myung's administration. This reinstatement reverses the 2023 downgrade and renaming of the Office of Inter-Korean Dialogue to the Inter-Korean Relations Management Bureau, which occurred under the previous conservative government led by Yoon Suk Yeol.

The ministry's organizational revamp aims to reopen currently suspended communication channels, foster conditions for breakthroughs in dialogue, and establish regular talks between South and North Korea. Additional bureaus will be created to focus on restoring economic cooperation projects, normalizing the Kaesong Industrial Complex, and gathering public opinions on policies toward North Korea.

As part of the plan, the staffing level in the ministry and its affiliated organizations will increase from 533 to 600 personnel to support these expanded functions.

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