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


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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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We categorize key intelligence into one of 30 different operations intelligence categories.

Different roles and functions within the organization can monitor different key issue areas. HR may monitor employment, wages, regulations, labor and management relations, etc., while P&L leaders may monitor overall developing trends.

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Korea faces longest sustained decline in youth employment rate since 2009 global financial crisis

Joongang Ilbo | English | News | Nov. 19, 2025 | UndeterminedEmployment

Korea is experiencing the longest continuous decline in youth employment rates since the 2009 global financial crisis, with the youth employment rate falling to 44.6 percent last month, down 1 percentage point from a year earlier. This decline has persisted for 18 months and coincides with a rise in long-term youth unemployment. As of last month, 35,000 young people aged 20s and 30s with at least a four-year university degree were unemployed for more than six months while actively seeking work, an increase of 7,000 from the previous year. Among them, 19,000 were aged 25 to 29, a key demographic of recent graduates.

The total number of long-term unemployed individuals also rose to 119,000, up by 21,000 from the previous year, marking the highest level since October 2021. Analysts cite a mismatch between young job seekers’ expectations and available job opportunities as a major factor. A recent government survey found that 34.1 percent of young people aged 15 to 29 who were economically inactive or nonwage earners reported difficulty finding desirable jobs as the primary reason.

The Bank of Korea (BOK) highlights the impact of automation and artificial intelligence on youth employment, reporting that 211,000 entry-level jobs were lost between the second half of 2022 and the first half of this year, with 98.6 percent of those losses in industries rapidly adopting AI technology. Employers’ preference for experienced candidates further limits opportunities for recent graduates. Additionally, there are concerns that extending the retirement age will restrict openings for younger workers. Experts emphasize the need for labor market flexibility and improvements in university education to enhance young workers’ productivity and job prospects.

Franchise restaurants pivot to cabbage as lettuce shortage comes to a head

Joongang Ilbo | English | News | Nov. 19, 2025 | Supply Chain Issues

A nationwide lettuce shortage in Korea, caused by abnormal weather patterns, is disrupting supply chains for major franchise restaurants. Chains like Lotteria and Subway are facing difficulty sourcing lettuce, leading to the adoption of cabbage as a temporary substitute in some menu items.

The shortage results from an unusually hot summer followed by a sudden temperature drop, which caused cold damage and delayed lettuce crop growth. Wholesale prices for iceberg lettuce have surged by 116 percent since November 1, reaching 5,188 won ($3.55) per kilogram, and have increased 225 percent compared to early 2025.

Lotteria is using cabbage to maintain the volume of vegetables in its burgers, while Subway has suspended sales of certain salad items due to supply challenges related to heat and humidity. Industry officials highlight that reduced production has made it difficult for suppliers to meet the demand from restaurant chains.

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Only Securities Firms Show Loan Growth in the Third Quarter

ZD Net Korea | Local Language | News | Nov. 19, 2025 | UndeterminedFinancial System Problems

In the third quarter of 2025, only securities firms among financial institutions showed consecutive loan growth, while deposit-taking banks and non-bank lenders experienced a slowdown or decline in household lending. Deposit-taking banks increased household loans by 10.1 trillion won, down from 19.3 trillion won in the previous quarter. Non-bank institutions, including insurers, savings banks, and card companies, saw their household lending shrink by 2 trillion won, decreasing from a 3 trillion won increase in the second quarter.

Specifically, insurers reduced loans by 1.2 trillion won, a greater decline than the previous quarter's 0.7 trillion won decrease. Card companies also expanded their loan reduction from 0.6 trillion won in the second quarter to 1.6 trillion won in the third quarter. Entities such as the Housing and Urban Fund and the Korea Housing Finance Corporation similarly cut back on household lending.

Only brokerage firms, encompassing securities firms, asset securitization companies, and moneylenders, increased household lending for the second consecutive quarter, though growth slowed to 3.7 trillion won in the third quarter from 5.3 trillion won in the second. This increase is linked to ongoing financial authority warnings against "debt investing," where households borrow funds to invest in stocks.

Margin loan balances have risen sharply alongside a surge in stock market trading volumes, growing from 18.8 trillion won in 2020–2025 to about 26 trillion won by mid-November 2025. In response, financial regulators have implemented strengthened monitoring systems. Despite the slowed loan growth by securities firms in the third quarter, future credit trends remain uncertain due to their close relationship with stock market performance.

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