South Korea

Intelligence for Better Decision Making

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


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Allies stage only 5 out of 20 UFS field training drills postponed to Sept.

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

In September 2025, South Korea and the United States conducted only five out of approximately 20 field training drills originally postponed from August as part of the annual Ulchi Freedom Shield (UFS) exercise. About half of the roughly 40 planned field training exercises scheduled for August were delayed by one month due to a heat wave, according to a report submitted by the Joint Chiefs of Staff (JCS) to Rep. Kang Dae-sik of the opposition People Power Party.

The JCS stated that the remaining drills are expected to be completed by the end of the year, noting that rescheduled field exercises typically resume later. South Korea’s military cited multiple factors for the rescheduling, including weather conditions and the operational advantage of spreading out drills throughout the year for improved readiness.

There is speculation that some drills were deferred as a conciliatory move aligned with the Lee Jae Myung administration’s efforts to improve inter-Korean relations. The article also included a photo of the South Korean Army Special Warfare Command conducting maritime infiltration training with U.S. forces on August 28, 2025, during the UFS exercise in Taean.

Trump’s threat to nix summit with Xi could throw a wrench in Korea’s diplomatic efforts

Hankyoreh - E | English | News | Oct. 15, 2025 | Geopolitical Conflict and Disputes

US President Donald Trump’s recent social media post indicating he may reconsider a planned meeting with Chinese President Xi Jinping at the Asia-Pacific Economic Cooperation (APEC) summit in Gyeongju has created uncertainty around South Korea’s diplomatic ambitions linked to the event. The South Korean government is currently in discussions with the US and China about the summit schedules, as the potential cancellation of the US-China meeting could affect other scheduled summits involving Korea, including those with the US and China.

Trump’s comments, triggered by China’s recent controls on rare earth exports, have raised concerns within the Korean presidential office about the length and nature of Trump’s visit to Korea. Seoul had hoped Trump would stay at least two days to facilitate multiple summits, but if the US-China summit is canceled, Trump might shorten his visit to just one day, limiting diplomatic opportunities for Korea.

Despite the uncertainty and Trump’s unpredictable communication style, Korean officials remain cautious about drawing conclusions, focusing instead on arranging the APEC schedule as planned. Trump himself indicated he would attend the summit regardless but was uncertain about the meeting with Xi. Analysts suggest Trump’s decision will be driven by self-interest and that the possibility of a meeting with Xi during APEC has not been entirely ruled out.

S. Korean defense firms showcase high-tech products, angle for presence in U.S. market

Yonhap | English | News | Oct. 15, 2025 | UndeterminedBizdev-Partnering

More than a dozen South Korean defense firms showcased advanced military technologies at the Association of the U.S. Army (AUSA) 2025 Annual Meeting and Exposition in Washington, aiming to strengthen their foothold in the U.S. defense market. The Korean Pavilion included companies such as Hanwha Aerospace, Poongsan Corp., Samyang Chemical, Korea Defense Industry Corp., Arion Communication, and D.I. Optical, among others, highlighting products like self-propelled howitzers, battle communication devices, gun aiming systems, advanced fuses, and tactical mobile devices.

Hanwha Aerospace presented the K9A1 self-propelled howitzer widely used globally and introduced the K9A2 wheeled howitzer concept, along with a modular charge system compatible with NATO-standard ammunition. Hanwha’s CEO emphasized the firm's technological relevance and industrial capacity as key strengths sought by the U.S. Army. Arion Communication featured the SAT-PRE device, which supports long-range special forces operations, having already supplied 1,200 units to South Korea’s Special Warfare Command and planning to enter the U.S. market.

Samsung Electronics exhibited its "Tactical Edition" mobile device tailored to enhance military situational awareness and communication, while Korea Defense Industry Corp. showed advanced artillery fuses, including an Impact Fuze compatible with multiple calibers, responding to rising global demand. Samyang Chemical introduced smoke grenades, infrared screening devices, and counter-terrorism suits, targeting participation in the U.S. Army’s Foreign Comparative Testing program to facilitate market entry.

D.I. Optical promoted the DTS-100L, a combined red dot sight, thermal camera, and rangerfinder optic aimed initially at the U.S. commercial market before military adoption. Poongsan Corp. displayed various ammunition products and is attempting to broaden its business beyond sporting ammunition. The exhibition reflects the broader effort by Seoul and Washington to deepen defense industrial cooperation amid increasing geopolitical tensions, especially with China and North Korea.

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