Samsung Co-CEO Koh Dong-jin announced that the global chip shortage is chipping away at business performance. Koh said that Samsung may even skip the introduction of its new Galaxy Note phone because of the lack of chips.
What’s happening? A global semiconductor supply chain crisis. Between goofy projections for demand, natural disasters hampering production, and rapid digitalization including a boom in crypto mining, there's been major misalignment between the supply and demand for computer chips.
Zoom out: Semiconductors account for about a fifth (nearly $100 billion) of South Korea’s exports. Intel and NVIDIA dominate the global market for storage chips but Samsung and SK Hynix control roughly two thirds of the market for memory chips. Demand for memory is burgeoning in response to intensive data-processing functions for emerging industries, especially as it relates to real-time response.
As a result, the Korean government is investing over $550 million to support R&D, design and production of chips for the new economy.
But there’s politics to play. The U.S. leads on the design IP in the value chain while Korean players have traditionally competed against the Taiwan Semiconductor Manufacturing Company to win contracts for production. Now, with Biden pumping $50 billion into domestic chip production in the U.S. and new entrants developing customized chips, Korean manufacturers are scoping out new strategies.
The semiconductor industry has long been a battlefield between global powers. For Korea, then President Park Chung-hee’s investments in semiconductor manufacturing in the 1970s came to fruition when the Reagan administration imposed an embargo on Japanese imports to the U.S. in the 1980s. With Japanese brands barred from the world’s most lucrative market, Korean companies made headway into this high margin business.
Looking forward: The state-run Korea Development Bank is teaming up with Hyundai Motors, Stonebridge Ventures and GU Equity Partners to invest in semiconductor design startup, OPENEDGES Technology through a $28 million deal.
OPENEDEGES Technology's design competencies lie in Neural Processing Units (NPU) and high-performance memory subsystems including NoC (Network on-Chip), an integral part of AI implementation. NPUs are the next-generation of semiconductors, acting like the human brain, capable of deciphering even unstructured information.
Alongside investments in 5G networks and AI, the Korean government is gearing up to look past just manufacturing and move towards industrial upgrades into AI-powering semiconductor IP.
Asia’s got talent
Wantedlab, an AI-driven recruitment service, is filing for an IPO on the KOSDAQ later this year.
Backstory: The company's AI-powered profile matching algorithm scans data on more than 1.5 million platforms to provide insights for job recruiters and seekers. The Wanted platform boasts 10,000 companies hiring across 5 countries and 2 million users. Since 2015, companies such as IBM, Facebook, Microsoft, Ebay, WeWork, Rakuten and Tencent have been using Wanted to recruit talent across Asia.
The company has raised $20 million to date from the likes of Korea Development Bank, Stonebridge Ventures, KTB network, Company K Partners, Kolon Investment and SL Investment.
Bottom line: While revenues doubled over the past three years to $14 million, the company reported a net loss of $8 million last year. Nonetheless, analysts expect the IPO to value the company at $90 million. 🎉
Zoom out: The Asian talent market is ripe for entrepreneurial ideas. The increase in educational and training opportunities, an expansion in the number of Asians returning from overseas study or work-abroad assignments, and the growing mobility of executives globally offers a plethora of opportunities for talent related startups.
VROOM, VROONG! 🚚
GS Home Shopping is entering into a strategic partnership with Mesh Korea, the company behind last-mile logistics brand VROONG.
Backstory: Mesh Korea was founded in 2012 as a B2B SaaS company serving the need for logistics management with the emergence of e-commerce. Today, Mesh Korea has more than 100 stations and 13,000 riders across the country. The company also has a full cold chain system optimized for fresh food delivery. They've secured $75 million to date from an array of investors including Naver, Hyundai and Mirae Global Asset Investments.
GS Home Shopping (a subsidiary of GS Group, the 8th largest chaebol in Korea) will take a 20% stake in Mesh Korea, on par with Naver’s shares in the company. GS plans to leverage Mesh Korea's delivery infrastructure to provide customers the rapid turnaround times that they have come to expect.
Zoom out: It's an important partnership ahead of GS Home Shopping’s merger with GS Retail - the subsidiary that holds 15,000 GS25 convenience stores across the country.
“GS Home Shopping’s business is centered on online with mobile and television, while GS Retail’s businesses like GS25, Lalavla and GS The Fresh are focused on offline,” said Kang Ji-seong, a spokesperson for GS Home Shopping. “So the merger would mean there will be more partners and sales channels without concerns for cannibalization.”
Food for thought: In light of Naver beefing up their e-commerce operations, we’re curious what they’ve got to say about GS’s foray into the segment with Mesh Korea.
On the radar
Companies raising over $1 million last week.
SmartScore Korea is raising $44.5 million in a Series D deal from Korea Development Bank and Hyundai Motors for their golf score management portal.
Korea Credit Data is raising $35.6 million in a Series C deal from Pavilion Capital, GS Holdings and KB Bank for its business management service Cash Note.
CoinOne is raising $28 million through a stock buy-in from Gamevill for their crypto exchange.
Lemonx is raising $27 million in a Series C deal from Smile Gate Investment, KClavis, Quantum Ventures, Kiwoom Investment, DB Financial Investment, Industrial Bank Korea, Union Investment Partners and L&S Venture Capital for their biotherapeutics products.
Copin Communications is raising $13.8 million in a Series B deal from KB Investment, Daekyo Investment, Hyundai Investment, Shinhan Capital, Stick Ventures and Wonik Investment Partners for their webtoon design services.
Howser is raising $12.5 million in a Series B deal from Naver, Atinum Investment, SL Investment, Premier Partners, HB Investment, SBI Investment, Bridge Investment and Hyundai Technologies for their logistics services catering to the furniture market.
ADX is raising $7 million in a Series C deal from NH Capital, Korea Development Bank and Hyundai Motors for their ads management platform.
Swing is raising $6.8 million in a Series A deal from Hashed, M-Capital, Humax, BDC Labs and Primer Sazze for their kickboard sharing service platform.
Positive Hotel is raising $5.8 million in a Series A deal from Stonebridge Ventures, Signite Partners and Partners Investment for their wellness-focused consumer products.
Inflearn is raising $4.4 million in a Series A deal from Korea Investment Partners, Mirae Asset Capital and Bon Angels for their ed-tech platform.
Yolo Corp is raising $2.6 million in a Series A deal from Smile Gate Investment and TS Investment for their cross-border e-commerce platform.
More Seoul Hits
Flights to nowhere. Since last December, a number of airlines in Korea have been offering no destination flights in an attempt to manage losses. Flights to nowhere start and end at the same airport and offer tax-free sales, while passengers are exempted from mandatory COVID-19 testing and the quarantine process after arrival.
Yum, kimchi premium. Kimchi premium refers to the arbitrage opportunity given higher prices for Bitcoin on South Korean exchanges in contrast to other global exchanges. While the price of Bitcoin has fallen dramatically in recent weeks, kimchi premium has offered investors up to 18% above the global market rate.
An essay: are Korean unicorns actually profitable? A comparison of business models, revenue schemes and loss justifications for Krafton, Socar, Market Kurly and Toss.
Would you rather toppings or a filling?
Hotteok, a filled Korean pancake, is a street food staple. Cherry blossom season may be over, but it’s the perfect weather for these warm, sweet goodies on a weekend morning.