The Korea Herald


4 in 10 Korean companies considering AI investment

More than 90% of surveyed firms say they plan to maintain or expand investment plans

By Park Han-na

Published : July 8, 2024 - 17:52

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SK Group Chey Tae-won poses with Amazon CEO Andy Jassy at Amazon's headquarters in Seattle, Washington, in this photo posted on Chey's Instagram on July 1. SK Group Chey Tae-won poses with Amazon CEO Andy Jassy at Amazon's headquarters in Seattle, Washington, in this photo posted on Chey's Instagram on July 1.

Four out of 10 South Korean conglomerates are considering investing in artificial intelligence over the rest of the year, as they expect AI technology would drive production efficiency, a survey by a leading business lobbying group showed on Monday.

The Federation of Korean Industries commissioned Mono Research to survey the domestic investment plans of the 500 largest Korean companies in terms of revenue and found that 10.6 percent said they set up capital investment plans tied to AI in the second half of this year while 33.3 percent said they are reviewing possible money allocation into the field. A total of 132 firms took part in the poll.

The biggest reason for their potential AI investment was making their production lines and logistics systems more efficient (43.9 percent).

Some 29.3 percent of them picked new product development and service quality improvement as their investment goal, followed by data analysis and strategy building (13.8 percent).

Despite concerns over high borrowing rates and the depreciation of the Korean won, the survey revealed an improved investment sentiment among Korean firms, particularly in the context of AI investment.

The chiefs of Samsung Electronics and SK Group are already making moves toward partnerships and investments focused on AI technology, banking on them and eventually reshaping the global economic landscape.

Last month, Samsung Electronics Chairman Lee Jae-yong held an exclusive meeting at Meta CEO Mark Zuckerberg’s home during his two-week business trip to the United States. They reportedly discussed a potential partnership in the AI area.

SK Group Chairman Chey Tae-won also met with CEOs of US Big Tech firms including OpenAI, Microsoft, Amazon and Intel last week to establish a global AI partnership. In a recent meeting with the group's executives, he also stressed the wave of changes driven by AI, urging heads of affiliates to strengthen their foot holdings in the AI value chain by leveraging the respective capabilities those units hold.

Three out of four conglomerates -- 74.2 percent -- said they would maintain the same amount of investment as in the first six months of this year. Some 16.7 percent said they would scale up their investment in the second half of this year, while 9.1 percent indicated a decrease in investment.

“Companies are facing a tough business environment with weakening cash flow caused by the strong dollar and high interest rates,” said Lee Sang-ho, vice president of the FKI's Economic and Industrial Research Department.

Lee called on the government to offer tax breaks and incentives for research and development for firms to activate capital allocation for future industries.

On the timing of investment recovery, 37.1 percent expected that investment activity would gain momentum in the first half of 2025.

“While growth is expected to slow down in the second half of this year due to tight monetary policies around the world, companies are pointing to next year's investment activation as major indicators such as interest rates and prices are expected to stabilize next year along with global economic recovery,” the FKI said.

The Bank of Korea projected the Korean economy would grow at 2.2 percent in the latter half of this year, compared with 2.9 percent in the first six months.