▲ AI PRISM* Personalized Economic Briefing
* Editor's note: AI PRISM (Personalized Report & Insight Summarizing Media) is an artificial intelligence-based personalized news recommendation and summary service developed with support from the Korea Press Foundation. It selects and provides six news items tailored to each reader type.
[Key Issues Briefing]
■ Polestar's Market Value Evaporates: More than 95% of the market capitalization of Polestar, a Chinese Geely-affiliated electric vehicle maker, has disappeared in the roughly four years since its listing. The company's restrained Nordic design has failed to match Chinese consumer tastes, and U.S. connected-car regulations have compounded the problem, pushing it out of both of its core markets at once. Polestar is pinning its last hopes on Europe, which accounts for 80% of revenue, but has been judged to face material uncertainty over its ability to continue as a going concern.
■ TSMC Revenue Surges: TSMC, the world's largest foundry, or contract chipmaker, set another monthly revenue record in August. Year-on-year growth accelerated to 53.3% in August from 44.7% in July. Analysts say orders are flooding in as investment in artificial intelligence infrastructure expands, leaving new plant construction unable to keep pace with demand.
■ Won's Upside Capped: The won-dollar exchange rate held at the 1,330 level even as surging U.S. Treasury yields, fears over oil prices and a falling KOSPI converged. Analysts attribute the contained move to an unusual pattern in which the dollar has failed to strengthen despite rising U.S. rates. They point to the fact that the latest rate increase largely reflects U.S. fiscal strains and concerns over confidence and supply-demand conditions in the Treasury market.
[News of Interest for Corporate CEOs]
1. Design Rejected, Regulatory Walls Raised: Polestar Loses 95% of Market Value
- Key summary: Polestar shares closed at $7.96 on the New York exchange on the 9th, down 10.86% from the previous session, and its market capitalization has shrunk about 95.2% to $1.3 billion from $27 billion at the time of its June 2022 listing through a special purpose acquisition company (SPAC). First-half results released on the 3rd of this month showed adjusted operating loss before depreciation and amortization widening 72.5% to $521 million from $302 million, while the gross margin excluding one-off items turned negative at -8.5% from 1.4%. Sales last year came to 60,000 units, or one-fifth of the 290,000-unit target set at the time of listing, and the company is being pushed out of the United States under new rules banning sales of connected cars, or smart cars, by Chinese and Russian companies. First-half free cash flow showed a net outflow of $1.061 billion, and the company was judged to face material uncertainty over its ability to continue as a going concern. Polestar secured up to $400 million in additional loans from Geely's Swedish unit on the day it reported earnings.
2. TSMC Sets Another August Revenue Record, Up 53.3% Year-on-Year
- Key summary: TSMC said in a regulatory filing on the 10th that August revenue came to NT$514.806 billion (about 21.9 trillion won). The figure was up 10.1% from July revenue of NT$467.58 billion (about 19.9 trillion won), the previous record, marking a second consecutive month of all-time highs. Cumulative revenue for January through August reached NT$3.38687 trillion (about 144 trillion won), up 39.3% from the same period a year earlier, and analysts forecast third-quarter revenue growth of 46.8%. The company expects the surge in demand for AI chips to continue beyond 2027 and has set this year's capital expenditure at $60 billion to $64 billion (about 80 trillion to 85.7 trillion won).
3. Won-Dollar Rate Holds at 1,330 Level Despite Triple Blow From Oil, Rates and Stocks
- Key summary: The won-dollar exchange rate closed at 1,339.2 won in the Seoul foreign exchange market on the 10th, up 3.1 won from the previous session. It rose as high as 1,343.8 won during the session before falling to 1,336.2 won, giving a daytime trading range of 7.6 won. One foreign exchange expert said the formula under which rising U.S. rates lead to a stronger dollar is now broken as the functioning of U.S. financial markets wavers, and analyzed that Korea's rate increase and a stronger yen have created a favorable environment for the won. Meanwhile, with international oil prices above $100 a barrel, Park Jong-woo, deputy governor of the Bank of Korea, said it was premature to conclude that the scenario had changed based on only about two days of movement.
[Reference News for Corporate CEOs]
4. Turning a Flash Month Into Annual Revenue: U.S. AI Startups Face Controversy Over Inflated Revenue Figures
- Key summary: The annualized revenue calculation methods adopted by AI startups in Silicon Valley have become controversial ahead of their listings. Annual recurring revenue (ARR), the conventional measure, estimates subscription-based revenue on a yearly basis, but AI companies also charge usage-based fees tied to tokens or hours of use, making recurring revenue difficult to calculate. As a result, the run rate method, which annualizes a single month's results, has spread, raising questions that some companies are exaggerating results by using a month with a flash revenue spike as the basis. Axios noted that Anthropic counts the full amount customers pay through cloud providers as revenue, while OpenAI counts only the amount after deducting partners' shares, and that such differences feed directly into corporate valuations.
5. Handong University, First Case of Prime Contractor Bargaining, Heads for Strike
- Key summary: The subcontractor union at Handong University, cited as the first case of prime contractor bargaining since the revised Trade Union and Labor Relations Adjustment Act took effect in March this year, has moved toward a strike. The union, made up of about 30 environmental and facility cleaning workers, held its first meeting with Handong University in April but received a decision to suspend mediation from the North Gyeongsang Regional Labor Relations Commission on the 4th of this month. The union demanded adequate staffing and oversight of the subcontractor's compliance with wage and collective agreements, but Handong University maintained that much of this goes beyond what the school can decide directly. Choi Joon-sun, professor emeritus at Sungkyunkwan University Law School, said administrative guidelines alone make it difficult to clarify management rights and the scope of prime contractor bargaining, arguing for the need for further revision.
6. Park Hong-keun: Future Response Fund Could Be Depleted, Depends on 3-5 Year Chip Cycle
- Key summary: Park Hong-keun, minister of planning and budget, said on the 10th that the duration of the Future Response Fund to be created next year will be flexible depending on future revenue conditions. Park said it depends on how the three- to five-year semiconductor cycle unfolds, noting that the fund could be depleted if sufficient resources do not come in. The government plans to create a 162.3 trillion won Future Response Fund next year, and Park projected that the size could grow further depending on the results of a revenue re-estimate late this month. The government will increase investment in higher education by 18.4% to 19.3 trillion won next year from 16.3 trillion won this year. It has also newly allocated a 700 billion won program to nurture future talent at regional national universities and 600 billion won to expand science and engineering infrastructure at regional private universities and junior colleges.
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