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Korean Industrial Insight No. 20 of AI, Semiconductors, Batteries, Electric vehicles, and Bio |
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2026-01-05 |
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Ⅰ. AI INDUSTRY TRENDS
1. Korean Government Plans to Nurture 10,000 AI and Deep Tech Startups
The Korean government has designated ventures as a core pillar of its growth strategy, aiming to cultivate 10,000 artificial intelligence (AI) and deep technology (deep tech)-focused ventures and startups into key drivers of national growth within five years.
On the 18th, the Ministry of SMEs and Startups (MSS), in conjunction with related ministries, announced the 'Comprehensive Measures for Becoming a Top 4 Venture Powerhouse.' Key objectives outlined included fostering 10,000 AI and deep tech startups, creating 50 unicorn and decacorn companies, and achieving entry into the global venture investment market, which is valued at 40 trillion won annually.
To achieve these objectives, the Korean government plans to strategically allocate a portion of the 50,000 Graphics Processing Units (GPUs) it intends to secure to the research and development (R&D) and demonstration efforts of ventures and startups. Furthermore, by reorganizing its policy paradigm around six strategic industries—AI, bio, content, defense, energy, and advanced manufacturing—it aims to nurture 10,000 AI and deep tech startups by 2030.
Through the 'Next-Generation Unicorn Discovery and Nurturing Project,' the government will provide 13.5 trillion won in support by 2030, offering staged investments and guarantees of up to 100 billion won per company. Large-scale follow-on investments and financial support linked with the National Growth Fund will also be continued.
A national account dedicated to public and retirement pension funds will be newly established within the Fund of Funds, with the Fund of Funds preferentially bearing initial losses. To enhance operational transparency and strategic focus, an inter-ministerial Fund of Funds operating committee will be formed. Financial regulations will be reformed to be more venture-friendly, expanding private capital participation. For instance, guidelines for applying risk weights when banks invest in policy funds will be established, and securities firms, especially large investment banks (IBs), will be encouraged to increase their mandatory supply of adventurous capital, including investments in unlisted ventures.
Institutional reforms will be introduced to attract talent and foster corporate growth. The scope of recognized venture companies will be expanded to include medium-sized enterprises, ensuring that innovative and high-growth companies can continue to develop. The multiple voting rights system will be rationalized to modernize corporate governance and increase management flexibility. Additionally, the process for granting venture company stock options will be improved, allowing them to be granted by board resolution, and the limit for stock options issued below market price will be expanded from 500 million won to 2 billion won.
A 'Senior Venture Fund' will also be created, where experienced venture companies and founders invest in junior ventures and startups. Tax incentives will be significantly strengthened, including relaxing the investment target company's business history limit from 7 years to 10 years and increasing the tax credit rate for corporate contributions to venture fund of funds. The M&A platform for small and medium-sized ventures will be upgraded to provide comprehensive support for discovery, advisory, and financing, with the M&A guarantee volume expanding to 200 billion won by 2030.
2. Ministry of Employment and Labor to Cultivate AI Capabilities for 1 Million Citizens. From Young Job Seekers to Retirees
- Ministry of Employment and Labor announces plan to develop AI talent in the labor market
- “Fostering individuals proficient in AI use is key to AI transformation”
- 56,000 job seekers lacking basic skills to receive training
- Entry-level young developers to be trained as AI engineers
- 100,000 workers in SMEs with insufficient AI training to be supported
- Middle-aged individuals and women with career breaks to learn AI basics
The Ministry of Employment and Labor (MOEL) is to support the development of artificial intelligence (AI) utilization skills for 1 million citizens over the next five years. This initiative stems from a shared understanding that nurturing individuals skilled in utilizing AI is directly linked to economic growth in the era of significant AI transformation.
The target beneficiaries are individuals within the labor market, including job seekers, current employees, and middle-aged workers, who will receive phased vocational training ranging from foundational AI comprehension to advanced engineer development.
MOEL announced the 'Labor Market AI Talent Development Plan: AI+ Competency Up Project' on the morning of the 18th, during the 2nd Ministerial Meeting on Science and Technology Relations held at the Government Complex Seoul.
The Korean government views cultivating individuals who can effectively utilize AI as central to the success of the AI Transformation (AX).
While the current Lee Jae-myung administration has declared its intention to open an 'AI Era for All Citizens,' MOEL will focus on supporting citizens at the entry, active employment, and transition stages of their careers in the labor market.
Firstly, for those at the entry stage lacking foundational knowledge, MOEL will support educational training aimed at improving AI understanding and application. AI basic understanding and utilization courses will be expanded within the general "National Tomorrow Learning Card (Naeil Baeum Card)" program, targeting 56,000 individuals for support next year.
Also, to serve as a 'ladder' for higher-level AI education, the proportion of AI-related content within the K-Digital Credit (KDC) will be expanded to over 50% next year (from 33.3% this year).
MOEL also set a goal to nurture 10,000 entry-level young developers into AI engineers across various fields, focusing on key roles such as AI system development and AI application software development.
To encourage youth participation, trainee stipends will be increased from 316,000 won per month to 400,000 won per month next year, with regional preferences for non-capital areas (600,000 won) and population-declining regions (800,000 won).
Additionally, a new business commercialization fund will be established next year to support startups that employ job seekers who have completed AI training, providing 150 million to 200 million won each to 80 companies.
During the active employment phase in the labor market, support will primarily focus on small and medium-sized enterprises (SMEs). According to MOEL, 21.2% of workplaces with 300 or more employees conduct AI training, whereas this figure drops to only 5.5% for those with fewer than 30 employees.
To address this disparity, MOEL will first identify SMEs interested in AI training. Subsequently, ten new 'SME AI Training Expansion Centers' will be established next year to assess companies' training demands and needs.
The objective is to introduce AI training programs to 2,000 companies by 2026. Tailored AI training will be offered to companies based on a diagnostic assessment of their AI adoption status, categorized into basic, intermediate, and advanced levels.
For SMEs identified at the basic level, and reflecting their limited training capacity, financial support will be provided. Notably, companies will be exempt from self-contribution costs when supporting their employees with online AI education and training. The overall goal is to train 100,000 currently employed individuals.
For those at the intermediate level, 90% of the tuition fees will be subsidized for SME employees participating in private AI training courses, with a preferential rate of 95% for non-capital regions.
For companies diagnosed at an advanced level, subsidies will be provided for external expert fees to cultivate key in-house AI talent.
3. Korea: Three Out of Four People Use AI. Gemini and Wrtn Challenge ChatGPT’s Dominance
- Consumer Insight survey on AI service usage rates
- Gemini’s usage rate rises by 16%
- ‘Wrtn 3.0’ launch effect with enhanced personalized features
Three out of four consumers in Korea have reportedly used an average of 2.2 artificial intelligence (AI) services. While OpenAI's ChatGPT maintains its leading position across all key indicators, Google's Gemini and the domestic service Wrtn are rapidly closing the gap.
Consumer Insight, a specialized mobile telecommunications research institution, released on the 18th the results of its analysis of AI service usage experiences, conducted over one month starting in October with 3,148 mobile phone users aged 14 and older.
The survey revealed that 74% of consumers had used an AI service at least once. In terms of frequency, "3–4 times a week" was the most common at 26%, followed by "1–2 times a week" and "almost daily" both at 23%. This indicates that 72% of AI service users engage with them at least once a week.
By age group, usage experience rates were highest among those in their 30s (86%) and 20s (83%), followed by 40s and teens (76% each), and 50s (67%).
Regarding service-specific usage experience rates, 'ChatGPT' led at 54%, an increase of 7% from the first half of this year (47%). It holds a unique majority user base and continues to expand its reach.
Google's 'Gemini' ranked second at 30%. While still behind ChatGPT, it showed a remarkable upward trend, doubling its usage rate in just six months with a 16% increase. Among domestic services, 'A.(Adot)' (17%) and 'Wrtn' (13%) performed well, ranking third and fourth, respectively.
While A.'s usage experience rate slightly declined by 1% compared to the first half of the year, causing it to fall one rank behind Gemini, Wrtn saw a 6% increase, moving up one position. Wrtn's growth was significantly driven by the launch of 'Wrtn 3.0,' which features enhanced personalization functionalities such as AI search, productivity assistance, and 'My Own AI.' Following these, 'Clova Note' recorded a double-digit 10% to secure fifth place. 'Perplexity' (8%), 'Copilot' (7%), 'Clova X' (6%), 'Notion AI' (5%), and 'ixi-O' (4%) completed the top 10 list.
ChatGPT also maintained its sole lead in brand awareness (the proportion of respondents who "have heard of or know the name") at 66%. Gemini, in second place at 49%, is rapidly catching up with a significant 18% increase. Similar to the usage experience rates, A.’s awareness slightly decreased to 42%, while Wrtn saw a substantial rise of 20% to reach 34%, securing fourth place.
In terms of user-perceived satisfaction, ChatGPT also held the sole top position at 68%, significantly outperforming the joint second-place holders Gemini, ixi-O, and Perplexity (each at 59%).
An official from Consumer Insight commented, "While ChatGPT remains overwhelmingly dominant across all consumer indicators, this is not a situation for complacency." The official added, "Considering Gemini's strong performance, doubling its usage experience rate in six months, and Wrtn's rapid growth, it's only a matter of time before the market landscape changes." They further stated, "There are many variables, such as the potential of domestic services familiar to Korean consumers like Clova X, and the market expansion of MS Copilot, which is strong in the enterprise sector, suggesting that the possibility of market restructuring is open."
Ⅱ. SEMICONDUCTOR INDUSTRY TRENDS
1. Korean Government Intensifies Support for AI Semiconductors and AI Bio: Securing GPUs to Foster ‘K-NVIDIA’
- The second ministerial meeting on science and technology relations convened
- Deputy Prime Minister Bae Kyung-hoon initiates support for advanced GPUs
- Drives the development of ‘K-KNVIDIA’ and innovation in AI bio
- Announces comprehensive strategies for AI semiconductor and bio sector growth
Amidst intensifying technological competition between the United States and China, the South Korean government has unveiled a comprehensive strategy to secure global leadership in the AI semiconductor and AI bio industries.
On the 18th, the Ministry of Science and ICT (MSIT) unveiled strategies for fostering 'K-NVIDIA' and driving AI bio innovation, including plans for AI semiconductor and bio sector development, during the second Ministerial Meeting for Science and Technology Relations.
During this ministerial meeting, nine key agenda items were deliberated and approved. These included: ▲Securing and Distributing Advanced GPUs for National AI Innovation, ▲30 Core Tasks for Realizing an AI-Driven Democratic Korea, ▲Promoting AI Talent Development in the Labor Market, ▲AI Semiconductor Industry Advancement Strategy, ▲National AI Bio Strategy, ▲Private Investment-Linked TIPS R&D Expansion Plan, ▲Nurturing a Basic Research Ecosystem, ▲Policy Directions for Government-Funded Research Institutes in Science and Technology, and ▲South Korea's Network Strategy for the AI Era.
South Korean Government to Secure 52,000 GPUs; Expanding AI Computing Infrastructure
The government's first agenda item, "Securing and Distributing Advanced GPUs for National AI Innovation," outlines the plan for acquiring advanced GPUs and their specific distribution.
The South Korean government has actively pursued the establishment of an 'AI Highway' as a core national task to enhance national AI competitiveness and stimulate private AI investment.
To this end, the government aims to secure over 52,000 advanced GPUs by 2028 through government procurement, the sixth-generation supercomputer, and the establishment of a national AI computing center.
Notably, approximately 13,000 GPUs were secured this year with an initial supplementary budget of around 1.46 trillion won. Of these, about 10,000 designated for government use will be progressively allocated to industry, academia, research institutions, and national AI projects.
Furthermore, from the 22nd, project applications from industry, academia, and research sectors will commence via an online platform. Based on demand surveys from relevant ministries, national projects that will drive national AI innovation, such as sector-specific AX, will also be identified.
Citizen-Centric AI Administration: Activating 30 Core Tasks
The second agenda item discussed was the "Realization of an AI-Driven Democratic Korea," focusing on 30 core tasks aimed at providing impactful AI services to citizens and innovating administrative processes.
For these 30 core tasks, a priority evaluation assessing representativeness, tangible impact, and readiness is conducted on candidate projects identified through demand surveys of central administrative agencies. They will subsequently be categorized into areas such as public service innovation, enhancement of government efficiency, and disaster/safety management.
To ensure the smooth execution of these tasks, the Ministry of Interior and Safety and the MSIT will collaborate to link and support necessary administrative and technical requirements, leveraging private sector expertise and resources.
This initiative plans to support infrastructure linkage through a pan-government hyper-scale AI common base, provide specialized technical assistance tailored to each task, support data for AI services, and identify best practices to disseminate successful outcomes.
Large-Scale AI Talent Development: Education Support for Youth and Middle-aged Professionals
The third agenda item focused on the promotion of AI talent development within the labor market. The strategy emphasizes strengthening AI utilization capabilities for individuals at all stages of their careers—market entry, active employment, and career transition.
For job seekers, the plan involves systematic AI education and training, covering AI understanding, practical application, and solution development.
Specifically, the "KDT AI Campus" will be operated to nurture entry-level young developers into AI engineers and AI application developers (targeting 10,000 individuals). Support will be significantly expanded to encourage active youth participation, with trainees receiving up to 600,000 won per month, varying by region.
For small and medium-sized enterprises (SMEs) and their current workers, a comprehensive package will be provided: identifying SMEs interested in AI training, diagnosing their training needs, and linking them to customized training programs.
For those preparing for new challenges, such as middle-aged and senior workers transitioning careers, public vocational training institutions like Polytech will offer not only basic AI utilization education (28,000 individuals) but also specialized AX training (1,000 individuals). Furthermore, new job transition training programs leveraging AI will be supported at a regional level.
'K-NVIDIA' Initiatives: Advancing AI Semiconductor Strategy
An "AI Semiconductor Industry Advancement Strategy" has been established to foster the domestic AI semiconductor sector. This strategy, the fourth agenda item, was jointly prepared by related ministries to establish a robust AI semiconductor industry ecosystem early on.
This strategy aims to intensively cultivate the domestic AI semiconductor industry to overcome the high power consumption and operating costs associated with GPUs in a landscape where various AI services, including national AI transformation and the advent of Physical AI, are proliferating. The goal is to secure a leading position in the AI inference-specialized market.
The plan includes three main initiatives—technological innovation, demand creation, and investment/talent development—all geared towards realizing the vision of "becoming a global powerhouse in AI semiconductors" by fostering 'K-NVIDIA.'
The technological innovation initiative targets securing the performance of domestically developed Neural Processing Units (NPUs) that support proprietary AI models. This will be achieved through the 'K-NPU Project,' which focuses on ▲performance enhancement, ▲establishment of large-scale testbeds, and ▲development of evaluation and feedback systems to realize a K-AI+NPU package.
Additionally, efforts will be directed towards securing Physical AI-specialized NPUs and ultra-low-power next-generation AI semiconductor technologies, alongside achieving technological independence across hardware and software for operating large-scale AI computing infrastructure.
Based on these advancements, demand and market creation will be actively pursued in conjunction with national AI transformation initiatives. The government plans to intensely support: ▲"7 Public Lead Projects for K-NPU" including AI utilization infrastructure for public administration, AX for public safety and defense, and AI CCTV conversion; ▲private sector projects involving NPU development, demonstration, and mass production in key industries such as automotive, home appliances, robotics, and defense; and ▲local demonstrations and consulting to facilitate the global expansion of the K-AI+NPU package.
National AI Bio Strategy Announced: Paving the Way for Global Hub Status
The National AI Bio Strategy was also announced. As the fifth agenda item, the government deliberated and approved the "National AI Bio Strategy," aimed at innovating bio research and industry through AI to elevate South Korea to a global hub.
This strategy involves developing AI bio models across five key areas, including new drug development, brain/anti-aging research, and medical devices. Furthermore, a widely applicable multi-modal, multi-scale bio foundation model will be established and opened for broader industrial use.
In the first half of next year, one pilot AI bio hub will be established, with plans to expand to more than two such hubs after 2027, to serve as engines for regional economic growth. These hubs will receive package support for R&D, infrastructure, data utilization, and talent development, thereby fostering an AI bio ecosystem where industry, academia, research, and hospitals can collaborate.
2. Doosan to Acquire SK Siltron, Accelerating Semiconductor Expansion
- Plans to acquire SK’s 70.6% stake
Doosan Group is to acquire SK Siltron, the world's third-largest semiconductor wafer manufacturer.
On the 17th, SK Inc. officially announced its selection of Doosan Corp. as the preferred bidder for the sale of its stake in SK Siltron.
The transaction involves SK's 70.6% ownership of SK Siltron, with specific terms to be finalized through future negotiations.
SK Siltron stands as South Korea's exclusive specialized manufacturer of semiconductor wafers, a critical foundational material for semiconductor chips. It currently holds the third-largest global market share for 12-inch wafers.
Industry experts estimate SK Siltron's total enterprise value at approximately 5 trillion won, with the acquisition price projected to range between 3 and 4 trillion won.
Doosan has been actively investing in the semiconductor materials and equipment sector as a key new growth engine, highlighted by its 2022 acquisition of Doosan Tesna, a semiconductor test company. Should this latest acquisition be finalized, it is widely anticipated to significantly enhance Doosan's competitiveness within the semiconductor business.
The sale of SK Siltron is largely interpreted as the final phase of SK Group's extensive business rebalancing efforts, which began across all its affiliates early last year.
To bolster its financial stability, SK has simultaneously pursued portfolio optimization and operational efficiency. This strategic overhaul has included significant structural reorganizations, such as the merger of SK Innovation and SK E&S, the merger of SK On and SK Enmove, and the divestment of environmental subsidiaries.
This move appears to signify a strategic shift away from its traditional vertical integration model, which encompassed semiconductor materials, towards concentrating resources on core value chains like AI and data centers.
3. Samsung and SK to Begin World’s First Mass Production of HBM4 in February. Position ‘K-Semiconductors’ for Market Domination
- To be integrated into NVIDIA’s next-generation ‘Rubin’ AI chips
- SK focuses on ‘stability’ and Samsung on ‘technological edge’ in competition
- Outpacing Micron to lead HBM market
Samsung Electronics and SK Hynix are set to commence the mass production of HBM4 (6th-generation High Bandwidth Memory) in February of next year, a first for the memory semiconductor industry. These two leading Korean semiconductor giants are aggressively moving to solidify their market dominance by being the first to mass produce HBM4, which is expected to be integrated into NVIDIA's next-generation 'Rubin' AI chips. This move demonstrates their "super-gap technology" over latecomers like Micron. The global memory market is consequently anticipated to see continued sole leadership from 'K-Semiconductors' next year.
According to the industry on the 26th, SK Hynix will officially begin HBM4 production at its M16 plant in Icheon, Gyeonggi Province, and its M15X fab in Cheongju starting in February next year. This transition to mass production follows the successful completion of final quality tests for paid HBM4 samples provided to NVIDIA. Samsung Electronics is also scheduled to begin HBM4 mass production at its Pyeongtaek campus in February next year.
HBM4 represents a significant turning point, moving beyond simple performance improvements to offering customer-specific products. SK Hynix has boldly adopted a 12nm logic process for the base die—the 'brain' of HBM4—in collaboration with TSMC, the world's leading foundry. This innovation has resulted in a twofold increase in bandwidth and over 40% improvement in power efficiency compared to its predecessor. Industry observers anticipate HBM4 will rapidly emerge as a flagship product, coinciding with NVIDIA's Rubin launch in the second half of next year. SK Hynix, having established its mass production system in September, plans to solidify its market leadership by being the quickest to launch final product mass production.
Samsung Electronics is leveraging its turnkey solution, which covers everything from design to production, and its advanced process technology. By boldly introducing cutting-edge processes for HBM4 production, Samsung has reportedly received top-tier performance evaluations from NVIDIA. According to Samsung Electronics, HBM4 has achieved an industry-leading performance level of 11.7Gbps in internal technical evaluations. Based on this, the company has expedited its mass production timeline to February, earlier than initially expected. In contrast, industry third-player Micron is targeting mass production in the second quarter of next year, indicating an inevitable time lag behind the Korean firms. NVIDIA is expected to finalize its next-generation chip development roadmap to align with Samsung and SK's February mass production schedules.
Simultaneously with HBM4 mass production in February next year, SK Hynix will activate the first cleanroom of its Cheongju M15X fab, embarking on an aggressive production volume strategy. The M15X fab, a key production hub with an investment exceeding 20 trillion won, will produce the current flagship HBM3E and the next-generation HBM4. Additionally, production lines for 10nm-class 6th-generation (1c) DRAM, applicable to the 7th-generation HBM4E products, will also be introduced.
The M15X fab will operate with two cleanrooms. Following the launch of the first cleanroom in February next year, the second cleanroom is slated for completion by the end of the year. This means production volumes from the first cleanroom, which opened in October, will ship two months ahead of schedule. When M15X operates at full capacity in mid-2027, it will add approximately 50,000 12-inch DRAM wafers per month. Through this expansion, SK Hynix aims to alleviate HBM supply shortages and maximize revenue.
Samsung Electronics is leveraging its formidable existing production capacity to intensify its pursuit of market share. Samsung's current monthly DRAM production volume stands at approximately 650,000 wafers, surpassing SK Hynix's 550,000 wafers (including M15X capacity). Analysis suggests that even specifically for HBM production capabilities, Samsung Electronics leads with about 170,000 wafers per month compared to SK Hynix's 160,000. Samsung's strategy is to leverage its superior production capacity to enhance HBM4 yield and technological excellence, aiming to reshape the market landscape. At a time when countries and companies worldwide, including the U.S., China, Japan, and Europe, are investing hundreds of trillions of won to secure leadership in the AI industry, ensuring a stable supply chain is critical.
Ⅲ. BATTERY INDUSTRY TREND
1. LG Energy Solution’s KRW 9 Trillion Battery Supply Contract with Ford Terminated
LG Energy Solution's long-term electric vehicle battery supply contract with U.S. automaker Ford has been terminated. The contract was valued at approximately 9 trillion won.
In a regulatory filing on the 17th, LG Energy Solution announced that it had received a termination notice from Ford regarding a long-term supply agreement for EV battery cells and modules.
The terminated contract, originally for supplies planned from 2027 to 2032, amounted to approximately 9.603 trillion won. This figure represents 28.5% of LG Energy Solution's revenue from the previous year.
The cancelled volume was intended for production at LGES's Wroclaw plant in Poland and was slated for supply to the European market, specifically for integration into a particular vehicle model.
LG Energy Solution clarified, "A portion of the contract was terminated due to the discontinuation of a specific vehicle model's development following changes in the customer's electrification plans." The company emphasized that "the cooperative relationship with Ford itself has not been terminated."
The company added that since the contract was for supplies from 2027 onwards, no preemptive large-scale investments, such as production line expansion, had yet been made for this particular agreement.
Separately, LG Energy Solution and Ford had previously signed another battery supply agreement for 34 GWh, scheduled from 2026 to 2030, which remains in effect.
2. Samsung SDI to Supply KRW 2 Trillion Worth of LFP ESS to U.S. Company
- U.S. factory line conversion to address local demand
Samsung SDI is set to provide a substantial supply of lithium iron phosphate (LFP) batteries for energy storage systems (ESS) to a major energy-focused enterprise in the United States.
On thea 10th, Samsung SDI announced that its Americas subsidiary, Samsung SDI America (SDIA), has executed a multi-year agreement with a leading U.S. energy infrastructure development and operations company for the provision of LFP batteries designated for ESS applications.
The total value of this contract surpasses 2 trillion won, with supplies scheduled to commence in 2027 and extend over an approximate three-year period.
Products fulfilling this agreement are slated for manufacturing via the conversion of existing production lines at a U.S.-based facility.
To strategically penetrate the U.S. electric vehicle market, Samsung SDI is currently operating a prismatic battery plant for EVs, jointly established with Stellantis. In response to evolving local market demands, the company is concurrently changing certain production lines for ESS applications.
While currently manufacturing ternary (NCA) batteries for ESS, the company intends to establish LFP production lines to specifically cater to localized demand.
The LFP battery cells supplied by Samsung SDI under this contract will be integrated into the Samsung Battery Box (SBB) 2.0, an all-in-one ESS solution.
The SBB is an integrated ESS solution wherein batteries and comprehensive fire safety systems are installed within a standard 20-foot container. The SBB 2.0 variant marks the debut of prismatic LFP batteries.
A Samsung SDI official remarked, "This contract is significant as it signifies Samsung SDI's expansion of its product portfolio into LFP batteries, a segment where ternary batteries have historically been our mainstay."
Samsung SDI has maximized the cost-competitiveness advantage of LFP materials through ongoing research and development, while also compensating for energy density through differentiated materials and advanced electrode process technology.
Industry analysts attribute the success of this LFP battery supply contract to Samsung SDI's recognized durability of prismatic cells, which are superior to pouch-type cells, and its globally acclaimed advanced safety technologies.
Samsung SDI's prismatic batteries feature a robust aluminum can-type external structure, providing strong resistance to external impacts. They are designed with safety devices such as vents and fuses, enabling immediate heat dissipation during internal thermal events.
3. Korean Battery Leaders Accelerates LFP Strategy Amidst ESS Growth
- Rapid expansion of ESS market driven by AI data center demand
- Key manufacturers intensify production of LFP batteries, primarily for ESS applications
Lithium iron phosphate (LFP) batteries, once widely dismissed as "low-cost Chinese products," are now fundamentally redefining the landscape of the global battery industry. Despite past limitations due to lower energy density, LFP batteries have firmly established themselves as critical components for mainstream electric vehicles (EVs) and Energy Storage Systems (ESS) by leveraging their superior safety and cost competitiveness. Amid the uncertainties posed by the EV "chasm" (a temporary slowdown in demand), LFP has become an indispensable strategic choice.
South Korea's three major battery manufacturers—LG Energy Solution, SK On, and Samsung SDI—are actively responding to this shift. In addition to their premium strategy focused on ternary batteries, they are accelerating the conversion of production lines to LFP technology. This includes a notable trend of retooling existing facilities to dedicate portions of their production capacity specifically to LFP for the rapidly expanding ESS market. Attention is now focused on whether these Korean giants can achieve significant success in the LFP market, which has historically been dominated by Chinese companies.
LFP Gains Renewed Attention in Growing ESS Market
The escalating prominence of LFP in the battery sector is largely driven by the rapid expansion of the ESS market.
An ESS is a system that stores generated electricity and supplies it when needed. By utilizing large-capacity batteries to store surplus power and then delivering it during peak demand, ESS significantly enhances grid stability. It plays an indispensable role in the renewable energy sector, where power generation from sources like solar and wind can be highly variable. More recently, ESS has emerged as a crucial infrastructure component for ensuring a stable power supply to AI data centers.
North America, in particular, is experiencing the fastest growth in the ESS market, making it a new strategic target for battery manufacturers. According to the U.S. Solar Energy Industries Association, the installed capacity of ESS in the U.S. is projected to triple from 36.3 GWh in the past year to over 100 GWh by 2030. Each 1 GWh represents a large-scale project valued at over 100 billion won.
Within this expanding ESS market, LFP is regarded as the most preferred battery type. ESS batteries, due to their operation at high capacities over extended durations, demand low explosion risk and high thermal stability. LFP batteries, with their structural design, offer reduced risks of heat generation and thermal runaway, making them ideally suited for these conditions. Furthermore, their longer lifespan and relatively lower cost contribute to economic feasibility and enhanced safety, positioning them as a strong advantage.
Indeed, the U.S. plans to gradually phase out Chinese-made batteries and components starting next year, under legislation known as the "One Big Beautiful Bill Act," through Prohibited Foreign Entity (PFE) regulations and high tariffs reaching up to 50%. Given that approximately 87% of current ESS installations in the U.S. utilize Chinese LFP batteries, it is anticipated that Korean battery companies will emerge as viable alternative suppliers to fill this void once these regulations are fully enforced.
Domestic Battery Manufacturers Intensify LFP Production Efforts: Who Will Claim Market Supremacy?
In response to the evolving ESS market, domestic battery manufacturers are rapidly advancing their LFP production strategies.
LG Energy Solution, in February, converted its Holland, Michigan plant into a dedicated ESS facility equipped for LFP battery production. More recently, the company reconfigured a portion of its automotive battery lines at its joint venture plant with Stellantis in Canada for ESS applications and has commenced full-scale mass production. This expansion is expected to boost LG Energy Solution's ESS battery production capacity to over 30 GWh by the end of next year.
LG Energy Solution is further expanding its development efforts beyond its pouch-type LFP-centric portfolio to include prismatic LFP batteries. Prismatic batteries are regarded as advantageous for the ESS market due to their noted durability and safety. In its Q3 conference call, the company explained, "Mass production technology for prismatic LFP is a generalized technology currently under development," adding, "We are pursuing improvements in energy density through stacking technology and high-loading electrodes."
Samsung SDI is also actively pursuing LFP battery production to target the U.S. ESS market. Having recently signed a multi-year agreement to supply LFP ESS batteries to a major U.S. energy infrastructure company, it plans to convert a portion of its local factory lines for dedicated LFP production, with supplies scheduled for approximately three years starting in 2027. Industry observers view this contract as a catalyst for Samsung SDI to expand its ESS battery portfolio beyond its traditional focus on ternary batteries to include LFP.
SK On intends to begin LFP battery production for ESS at its dedicated plant in Georgia, U.S., next year, and is also considering converting some production lines at its Tennessee plant for ESS. Domestically, the company is addressing increasing demand by converting certain lines at its Seosan plant for LFP battery production for ESS applications.
Ⅵ. ELECTRIC VEHICLE INDUSTRY TRENDS
1. Hyundai Motor Group to Expand One-Stop EV Charging with PnC to Over 1,500 Locations
Hyundai Motor Group is set to significantly expand its 'Plug & Charge (PnC)' charging network to dramatically enhance electric vehicle (EV) charging convenience.
On the 18th, Hyundai Motor Group announced plans to increase the number of PnC-enabled charging stations from the current 64 to over 1,500 by next year. This strategy aims to innovate the domestic EV charging ecosystem by extending PnC functionality, previously limited to its proprietary ultra-fast 'E-pit' charging stations, to the infrastructure of other charging operators.
PnC is an international standard technology that enables automatic vehicle authentication, charging, and payment simply by connecting the charging cable to the EV, eliminating the need for separate authentication procedures. Its key features include enhanced security through encrypted communication between the vehicle and the charger, while significantly simplifying the user experience.
Hyundai Motor Group will collaborate with key charging operators, including Chaevi (the leading operator for rapid charging stations, excluding those managed by the Ministry of Climate, Energy, and Environment), GS Chargev (the top operator for slow charging stations), NICE Infra, Starkoff, and Everon, to drive the widespread adoption of PnC.
2. BYD Shows Good Performance in Korea
Chinese electric vehicle (EV) manufacturer BYD is achieving comparatively strong sales performance in the South Korean automotive market, confounding initial predictions that it would struggle against established domestic and other imported brands. However, its sales figures still significantly lag behind Tesla, widely considered the 'national EV' in Korea.
The primary model driving BYD's market penetration is the mid-size electric SUV, the 'Sealion 7,' which was introduced in September 2025. This model is currently benefiting from a "new car effect," generating stable sales. According to CarIsYou Data Lab, the Sealion 7 recorded 2,018 new vehicle registrations in its initial three months. This represents a remarkably strong market entry, especially when considering that BYD's other offering in the Korean market, the 'Atto 3,' sold 1,270 units during its first three months.
The market's initial expectation, particularly concerning widespread consumer resistance to Chinese products and predictions that BYD vehicles would primarily appeal to taxi companies or corporate buyers, have also been disproven. The breakdown of consumer types revealed 83.3% personal ownership versus 16.7% corporate vehicles. Furthermore, private use accounted for the vast majority at 95.2%, indicating that most purchasers acquired the vehicle for personal use. Only 24 units were registered as taxis. The typical buyer profile consisted predominantly of males in their 40s and 50s.
Despite BYD's unexpectedly strong performance, analyses suggest the brand still faces a significant journey ahead. It continues to lag behind Tesla, which is aggressively expanding its presence in the Korean market, including the rollout of its Full Self-Driving (FSD) system. From September to November 2025, new registrations for the Tesla Model Y reached 18,253 units. This volume is nine times higher than that of the Sealion 7.
Beyond Tesla, even domestic market leaders, Hyundai and Kia EVs, registered sales more than double those of the Sealion 7 during the same period. Between September and November, Kia's flagship EV3 recorded 4,668 new registrations, while Hyundai's representative Ioniq 5 registered 4,100 units. The sales of both models recorded over twice as high that of the Sealion 7's.
An official from CarIsYou Data Lab commented, "The ultimate success of the Sealion 7 will largely depend on its ability to maintain a consistent average monthly sales volume of 400 to 500 units once the initial 'new car effect' dissipates.”
3. LG Energy Solution Secures KRW 2 Trillion EV Battery Supply Deal with Mercedes-Benz
- Contract covers North America and Europe, accounts for 8% of annual revenue
- Expected to power mid-to-low-end electric vehicle models
LG Energy Solution is to supply 2 trillion won worth electric vehicle (EV) battery to Mercedes-Benz. On the 8th, LG Energy Solution officially announced the 2.06 trillion won EV battery supply agreement with Mercedes-Benz AG through a regulatory filing. This value represents approximately 8% of LG Energy Solution’s revenue from the previous year (25.6196 trillion won). The batteries are slated for supply to North America and Europe, with the contract period running from March 1, 2028, to June 30, 2035. LG Energy Solution stated, "The terms, including the contract value and period, are subject to change through future negotiations," and "Further details beyond the public disclosure cannot be revealed due to confidentiality agreements with the client."
Previously, LG Energy Solution had secured a total of three large-scale battery supply agreements with Mercedes-Benz last year and this year. This recent contract suggests that Mercedes-Benz has selected LG Energy Solution as a key partner to gain dominance in the EV market.
LG Energy Solution announced battery supply contracts amounting to 150GWh last year and this year. Although the specific terms of these contracts were not disclosed at the time, industry experts have speculated that they involve 46-series cylindrical batteries. Consequently, there is an analysis that the batteries included in this latest contract are highly likely to be intended for mid-to-low-end EV models.
In September, Mercedes-Benz unveiled an extensive electrification strategy, committing to launch over 40 new vehicle models globally by 2027. This ambitious plan necessitates a diverse range of batteries to accommodate various segments, from premium to entry-level models.
Ⅴ. BIO INDUSTRY TRENDS
1. Korea to Develop AI for Brain and Anti-Aging Research. Securing 7 Million Bio-Data Records.
- National AI bio strategy
- AI integration across 5 key sectors
- AI bio innovation hubs to be established next year
The Korean government is set to develop artificial intelligence (AI) models for innovative research in advanced bio-fields such as brain and anti-aging studies, alongside securing a massive volume of high-quality bio-data for these initiatives.
On the 18th, the Ministry of Science and ICT (MSIT) approved the 'National AI Bio Strategy' at the second Ministerial Meeting for Science and Technology Relations. This strategy is designed to build and develop AI bio models across five key sectors: new drug development, brain and anti-aging, medical devices, bio-manufacturing, and agri-food.
In the new drug development sector, the paradigm of R&D will shift towards a system where AI autonomously designs and validates candidate substances, based on bio foundation models and agentic AI. The 'National AI Bio Research Institute' will lead the establishment of multimodal and multiscale bio foundation models, making them accessible for practical industrial application. An agentic AI framework will be developed to autonomously execute tasks required throughout the new drug development process.
New drug development will be dramatically accelerated by promoting full lifecycle AI utilization, developing AI-based novel modality design technologies, and automating testing, validation, and manufacturing processes through AI and robotics. For the four sectors excluding new drug development, specialized AI models tailored to each field's characteristics will be developed and utilized to accelerate R&D and enhance industrial productivity and economic efficiency.
The government will also promote the creation of an AI bio innovation ecosystem involving industry, academia, research institutions, and hospitals. Starting with the establishment of one pilot hub in the synthetic drug field next year, the hubs will be actively expanded to two or more sectors from 2027. Each hub will receive support for AI bio R&D, as well as the construction of computing infrastructure essential for large-scale AI bio model development, and AI/robotics-based high-speed experiment and validation infrastructure.
A closed-network cloud will be established, and in consultation with relevant ministries, special provisions for data utilization regulations will be pursued. A system will be put in place to safely and conveniently utilize sensitive data, including human-derived material data. Data generated using the infrastructure established at these hubs will be registered in the Korea BioData Station (K-BDS) and made openly accessible for external researchers to freely utilize.
To support the full lifecycle from R&D to commercialization within AI bio innovation research hubs, an 'AI Bio Pan-Government Consultative Body' will be operated, centered around the 'National Bio Innovation Committee,' and an incentive system will be established to encourage participation from industry, academia, research, and hospitals.
High-quality bio-data and computing infrastructure are considered the foundational strengths of AI bio. Accordingly, support will be provided to enhance access to and utilization of bio and medical data, and to build AI computing infrastructure for use in AI bio research.
Through the expanded application of Data Management Plans (DMPs), bio-data produced from national R&D projects will be linked to the K-BDS. Additionally, more than 7 million data records will be secured by 2030 through initiatives such as building a dataset of 1 million Koreans and data reproduction.
The Korean government is also committed to improving accessibility and usability of bio and medical data. It will systematically pursue cross-ministerial 'mammoth set' construction projects and create an environment where scattered data across various ministries and institutions can be conveniently utilized. This includes applying consent for multiple institutions when donating human-derived materials, establishing cross-ministerial bio-data maps, and supporting medical data utilization. Alongside promoting bio and medical data utilization, the government will foster bio research and industry through the convergence of AI and data technologies, establish a legal framework for safe medical data utilization, and concurrently pursue institutional improvements to enhance the convenience of medical data usage.
2. South Korea’s Bio-Health Exports Projected to Surpass $30 Billion for the First Time Next Year
- Anticipated to break records again, driven by expansion into U.S. and European markets
South Korea's bio-health industry exports are projected to reach an all-time high of $30.4 billion (approximately 44.9312 trillion won) next year, propelled by significant market expansion into the United States and Europe.
On the 18th, the Korea Health Industry Development Institute (KHIDI) released its report on the export trends and outlook for the bio-health industry.
According to the report, this year's bio-health industry exports are expected to record approximately $27.9 billion, an increase of 10.6% compared to last year.
Bio-health industry exports have consistently grown since surpassing 10 billion in 2016, exceeding 20 billion in 2020.
While total exports declined in 2022 and 2023 due to factors such as reduced medical device exports following the COVID-19 pandemic's transition to an endemic phase, the industry recovered its growth momentum last year, largely driven by the strong performance of "K-Beauty."
KHIDI's analysis indicates that increased exports of biopharmaceuticals and basic cosmetic products to the U.S. and Europe have driven the overall export improvement this year. Notably, biopharmaceutical exports, which constitute the largest portion of pharmaceutical exports, are expected to see a final increase of 25.7% compared to last year, driven by growing demand in the U.S. and European markets.
While "K-Beauty" has experienced a slowdown in growth in the Asia-Pacific region due to aggressive low-cost competition from Chinese cosmetics, its market expansion into the U.S. and Europe is expected to lead to stable growth in cosmetic exports. The final estimated export value for cosmetic products this year is $11.4 billion.
Looking ahead to next year, bio-health industry exports are anticipated to increase by 9.0% from this year, reaching 30.4 billion (comprising 11.7 billion for pharmaceuticals, 6.2 billion for medical devices, and 12.5 billion for cosmetics). This forecast suggests that the industry will once again achieve record-breaking performance, following this year's success.
Next year, the shift in export destinations from the Asia-Pacific region towards the U.S. and Europe is expected to boost pharmaceutical sales in these markets. KHIDI specifically analyzed that exports of toxins, such as Botox, will also increase as they receive broader international approvals and their supply chains expand into emerging markets, including Latin America.
The proliferation of "K-Beauty" is also projected to drive growth in exports of medical devices, such as cosmetic laser equipment, and other cosmetic products. KHIDI commented, "The K-Beauty experience is expanding among Generation Z consumers, online consumption is becoming more active, and entry into emerging markets is expected to accelerate."
3. Samsung Biologics Acquires Major U.S. Bio Plant for KRW 400 Billion
Amidst the accelerated realignment of the global bio supply chain, driven by the Trump administration's drug tariff policies and the implementation of the Biosecurity Act, Samsung Biologics has moved to establish a local production foothold by acquiring GSK's U.S. biopharmaceutical manufacturing facility for 413.6 billion won.
On the 24th, Samsung Biologics announced through a regulatory filing its agreement to acquire global pharmaceutical company GlaxoSmithKline (GSK)'s U.S. biopharmaceutical manufacturing facility for $280 million (approximately 413.6 billion won). The acquisition process is projected to be concluded within the first quarter of next year.
This acquisition by Samsung Biologics represents the second largest overseas production facility purchase by a Korean bio company this year, following Celltrion's acquisition of an Eli Lilly plant for 460 billion won.
Prior to this, SK Bioscience acquired the German CDMO company IDT Biologika for 339 billion won last year, and Lotte Biologics acquired Bristol Myers Squibb (BMS)'s Syracuse plant for 208 billion won in 2023.
The GSK plant to be acquired by Samsung Biologics is strategically located in the heart of Maryland's bio cluster and possesses an annual drug substance (DS) production capacity of 60,000 liters. Comprising two manufacturing buildings, this facility is equipped with the infrastructure to support antibody drug production across various scales, from clinical trials to commercial manufacturing.
To ensure operational stability, Samsung Biologics has decided to retain all current local employees. The company also plans to review additional investments, including capacity expansion, based on mid- to long-term demand and operational status.
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Korean Industrial Insight No.22 of AI, Semiconductors, Batteries, Electric vehicles, and Bio in chinese
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