Big companies suspend investments to avoid worst-case scenario: The DONG-A ILBO
Business activities of large corporations, including investment and production, are contracting due to unprecedented challenges marked by three peaks: high inflation, oil prices and exchange rates. As the exchange rate of the Korean won against the dollar soars, companies wait or revise their investment plans taking into account the costs and saving as much cash as possible to avoid the worst case.
According to the business sector on Friday, major Korean companies are busy evaluating their business plans due to the deteriorating business environment and lower demand caused by the three summits. On Thursday, LG held an on-site CEO workshop three years from now to discuss its mid- and long-term business strategy. Samsung also held a CEO meeting on Monday to discuss current economic issues, while SK plans to hold a CEO seminar in October.
Many companies have also halted their investments at home and abroad. Hyundai Oilbank and Hanwha Solutions have returned to their plans to create major facilities. Micron, a US memory chip maker, also announced on Thursday that it would cut investment by 30% next year. On Thursday, Apple’s stock price fell 4.9% as it recently backed out of its plan to increase iPhone 14 production.
As global tech companies scaled back investment plans, production of semiconductors, Korea’s main export, fell by the biggest margin in 14 years. According to Statistics Korea’s monthly industrial statistics, August saw a 14.2% drop in semiconductor production month-on-month, recording the largest drop of 17.5% since December 2008. The cyclical component of the composite leading index, which predicts the turning point of the economic cycle, fell by 0.2 points to 99.3 compared to the previous month.
As the economic situation has worsened in Korea, the government has brought together leaders of major companies to develop solutions. Chairman Yoon Suk-yeol held a meeting to review macroeconomic and financial conditions at the Korea Banking Federation on Friday with financial experts from major companies including Samsung Electronics, SK, LG Electronics and Hyundai Motor. “Rising global interest rates and market insecurity are slowing down the real economy,” Chairman Yoon said. “We will share the challenges of companies that live first-hand and develop solutions with experts in macro-economics and finance and financial leaders from large companies.
Choong-Hyun Song [email protected]