South Korea

Intelligence for Better Decision Making

Naver and Kakao Accelerate AI-Driven Infrastructure Development to Support Next-Generation Services

Nov. 18, 2025 | Technology & Innovation

Cloud computing platforms and data centers are evolving rapidly to meet the demands of expanding AI workloads.

**Naver invested 1.6262 trillion won in R&D during the first three quarters of 2025, a 19.6 percent increase from the same period last year, putting it on track to surpass 2 trillion won for the full year.**
The company is pursuing 151 distinct R&D projects, many aimed at creating AI agents for shopping, video services, DevOps tools driven by large language models, and browser-based interactions.

**Over the same period, Kakao spent 962.6 billion won on R&D, a 0.9 percent decline from 2024, yet it expects to match or exceed its 2024 full-year R&D total of 1.2696 trillion won.**
Kakao’s research chiefly focuses on building an AI agent ecosystem that integrates seamlessly with its flagship KakaoTalk messaging platform.

**Both companies have boosted infrastructure outlays to sustain AI workloads.**
In Q3, Naver directed 218.6 billion won to GPU-related infrastructure, up 22.7 percent year-on-year, and plans to invest 1 trillion won in overall infrastructure this year, followed by another 1 trillion won earmarked for GPUs in 2026. In the same quarter, Kakao raised its infrastructure and outsourcing spending by 34 percent to 261 billion won, driven by enhancements to its AI service infrastructure and projects tied to SM Entertainment.

**Naver and Kakao each reported record revenue and operating profit in Q3 2025, and both management teams have pledged to channel those gains into further technology development.**
They aim to accelerate AI integration in the second half of the year and roll out “AI agents” as core service offerings next year, leveraging advanced large language models and expanded GPU capacity to provide personalized, real-time assistance in e-commerce, content delivery, and communications.

**At recent industry conferences, Naver’s CEO Choi Su-yeon introduced the “AgentN” strategy, which unites multiple AI agents into a single platform covering search, commerce, and messaging.**
Kakao’s CEO Jung Shin-a outlined sweeping AI upgrades for KakaoTalk and other services, emphasizing context-aware, agent-based user experiences. Both executives stressed that proprietary AI models and large-scale compute capacity are vital to delivering these next-generation capabilities.

**Academic and industry experts view these investments as a strategic move toward technological self-reliance and market leadership in AI.**
Korea University professor Lee Seong-yeop argued that building interoperable ecosystems—linking search, commerce, and messaging through robust computational infrastructure, proprietary large language models, and real-time personalization—is critical for maintaining long-term competitiveness in the rapidly evolving AI landscape.

Semiconductor-Led Industrial and Export Growth Drives South Korea’s Third Quarter Economic Gains

Nov. 18, 2025 | Macroeconomics & Growth

South Korea’s industrial output in the third quarter of 2025 showed robust gains across manufacturing, retail and services, supported by strong export demand and targeted government measures.

South Korea’s industrial production rose 5.8 percent year-on-year in the third quarter of 2025, reflecting continued momentum in key manufacturing sectors and bolstering overall economic performance for the period.

**The semiconductor and electronics sector drove industrial growth, with output climbing 16.5 percent in July–September.**
Automobile manufacturers also boosted production, which increased 7.5 percent over the same period, demonstrating the strength of the country’s export-oriented manufacturing base.

**Regionally, North Chungcheong Province led all areas with a 19.1 percent year-on-year increase in industrial output, followed by Gyeonggi Province at 15.9 percent, both benefiting from dense concentrations of chip fabrication and electronics assembly facilities.**
In contrast, production contracted in Seoul, South Jeolla Province and Jeju Island, reflecting uneven regional industrial dynamics.

**On the domestic front, retail sales rose 1.5 percent year-on-year in the third quarter, aided by government cash handouts designed to spur private consumption.**
Sejong recorded the largest increase at 8.8 percent, while Incheon and Daegu saw gains of 5.5 percent and 5.3 percent, respectively. Seoul and Jeju experienced declines of 2.7 percent and 1.3 percent.

**The service sector expanded 3.1 percent nationwide in the third quarter, led by Seoul’s 6.1 percent growth.**
Ulsan and Gyeonggi Province followed with increases of 5.3 percent and 4.9 percent, demonstrating the ongoing recovery in domestic services demand and urban economic activity.

**Exports grew 6.5 percent year-on-year in the third quarter of 2025 as strong global demand drove shipments of semiconductors, ships and automobiles.**

Monitored Intelligence for South Korea - Nov. 19, 2025

News
Media
277

Government
Releases
22

City/State
Releases
39

Embassy
Releases
2

Foreign
Service
Advisories
0

Academic/
Think
Tank
3

Podcasts
0

Videos
0

Social
Media
0

Business
Releases
1

Erudite Risk takes an all risks approach to intelligence reporting. We categorize key intelligence into one of 40 different risk intelligence categories.

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Fact sheet provision lowers barriers for U.S. platforms, but Korean firms may lose competitiveness

Joongang Ilbo | English | News | Nov. 19, 2025 | UndeterminedBizdev-Partnering

The U.S.-Korea joint fact sheet released on November 14, 2025, includes a provision ensuring that U.S. companies face no discrimination or unnecessary barriers in digital services regulations, including network usage fees, online platform rules, and cross-border data transfers. This provision has attracted attention from Korea’s platform industry because it challenges Korea's current regulatory measures, which are based on national security and data protection grounds.

Although the fact sheet is not legally binding, it could influence Korea’s ongoing legislative discussions around imposing network fees on big tech, the Online Platform Fair Act Law, and restrictions on exporting digital map and location data. The fact sheet may slow the progress of some regulations, providing domestic platform firms temporary relief. However, experts caution that it may cement advantages for foreign tech giants by facilitating their cross-border data transfers, potentially undermining the competitiveness of Korean firms.

Industry observers note that while Korean companies may derive little benefit from repatriating data collected abroad, U.S. tech giants can significantly leverage Korean consumer data for global service development. This dynamic threatens to weaken domestic firms that currently rely on local data for competitive advantage. Legal scholars warn that ambiguities in the fact sheet could expose Korea to accusations of discrimination, leading to stricter regulations on local firms and placing Korea in a weaker negotiating position on future digital regulatory standards.

Seoul to start publishing report on trade barriers akin to USTR's annual NTE report from 2026

Yonhap | English | News | Nov. 19, 2025 | Regulation

Starting in 2026, South Korea's Ministry of Trade, Industry and Resources will begin issuing regular reports on foreign trade barriers to better address policies negatively impacting South Korean companies. This initiative was announced at a public-private conference involving government officials and representatives from key industries such as batteries, steel, and biopharmaceuticals.

The forthcoming reports will resemble the U.S. Trade Representative's National Trade Estimate (NTE) Report on Foreign Trade Barriers. The move follows a recent trade agreement between Seoul and Washington, which includes commitments to tackle various trade obstacles, including issues related to Seoul's regulations on digital services and automobile imports.

The ministry plans to develop a database cataloging foreign trade barriers encountered by Korean firms abroad and analyze their effects. This effort aims to foster a more favorable overseas business environment for domestic industries. Trade Minister Yeo Han-koo emphasized the need for proactive trade policies in response to evolving global trade dynamics despite the recent U.S.-Korea trade negotiations.

World's first CVD graphene plant completed in Korea

Joongang Ilbo | English | News | Nov. 19, 2025 | UndeterminedTech Development/Adoption

Graphene Square, a South Korean graphene film manufacturer, has completed the world’s first mass production facility for chemical vapor deposition (CVD) graphene film. The plant, located in Pohang, was officially completed on November 18, 2025, and is the first of its kind globally.

CVD graphene film is an ultrathin, continuous layer prized for its flexibility, transparency, and excellent electrical and thermal conductivity. It is a crucial material used in flexible displays, wearable electronics, and advanced batteries.

The new facility is expected to contribute to economic growth in Pohang, a key steel industry hub in North Gyeongsang province. The Ministry of Trade, Industry and Resources emphasized the importance of graphene as a strategic material for the competitiveness of advanced industries and pledged to support further development in this sector.

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