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Trends and Current State Analysis of AI and ICT Companies in 2023

GOOVER DAILY REPORT August 3, 2024
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TABLE OF CONTENTS

  1. Summary
  2. Analyzing Major Trends and Current State of AI and ICT Companies in 2023
  3. Financial Performance and AI Competitiveness of Naver and Kakao in 2023-2024
  4. Nasdaq Listing of Naver Webtoon and Its Corporate Value Prospects
  5. Global Reach and Market Dynamics for Naver Webtoon
  6. Conclusion

1. Summary

  • The report titled 'Trends and Current State Analysis of AI and ICT Companies in 2023' examines key trends and developments in the AI and ICT sectors, specifically focusing on companies such as KT Skylife, LG CNS, LS Electric, Samsung Electronics, Naver, and Kakao. The report outlines how these companies are leveraging AI to enhance their products and services and improve their market position. For example, KT Skylife is developing AI-driven media solutions for amateur sports broadcasting, while LG CNS is working on AI-based language tutor apps. LS Electric has made advances in smart factories, significantly boosting productivity and energy efficiency. Samsung Electronics incorporates AI in semiconductors and home appliances to enhance user experience. Naver and Kakao both show strong financial performance and are investing heavily in AI to innovate and expand globally. Naver Webtoon's Nasdaq listing is highlighted as a significant indicator of the growing importance of Korean digital content in global markets.

2. Analyzing Major Trends and Current State of AI and ICT Companies in 2023

  • 2-1. KT Skylife: Applying AI-based Media Solutions in Amateur Sports Broadcasting

  • KT Skylife, in collaboration with its subsidiary HCN, as well as with Pixellot and Hogaak, is developing AI-based media solutions for broadcasting amateur sports. The 'AI Sports' service utilizes unmanned AI cameras to automatically produce content, targeting approximately 500,000 amateur athletes and sports enthusiasts registered in clubs and sports associations. The solution is also being offered to local sports facilities and school gyms nationwide. The platform aims to secure 320,000 subscribers within five years. The service provides low-cost content production for amateur sports markets and supports user interaction through cloud-stored content and app-based editing.

  • 2-2. LG CNS: Developing AI Tutor Apps in Collaboration with a Japanese Language Institute

  • LG CNS has entered into a partnership with AEON, a major Japanese language education company. The collaboration involves developing an AI English conversation tutor app for public education, renewing the 'AI Speak Tutor 2' app, and enhancing AEON’s online learning management systems. The new app will enable users to practice over 500 situational conversations, with AI analyzing pronunciation and speaking speed. Additionally, integrated data management features will support both online and offline learning environments.

  • 2-3. LS Electric: Enhancing Productivity and Energy Efficiency Through Smart Factories

  • LS Electric has been advancing its smart factory roadmap since 2019, achieving significant productivity and energy efficiency improvements. Its Cheongju plant was selected as a 'Global Lighthouse Factory' by the World Economic Forum, seeing a 60% increase in productivity and a 60% reduction in energy consumption. Innovations include autonomous mobile robots, automated guided vehicles, AI-powered real-time welding systems, and AI-based visual and acoustic inspection systems. The company leverages big data analytics to maximize factory efficiency.

  • 2-4. Samsung Electronics: Integrating AI in Semiconductors and Home Appliances

  • Samsung Electronics employs a dual-track AI strategy using 'Bixby' and Google Assistant across its product range. The company integrates AI functionalities into its Galaxy smartphones and home appliances, enhancing user experience with voice command capabilities. Samsung also focuses on competitive semiconductor technologies like HBM and CXL, and innovative features in wearable devices by combining AI with healthcare applications.

  • 2-5. Naver and Kakao: Strengthening AI Capabilities and Expanding Global Market Presence

  • Naver and Kakao are enhancing their AI capabilities to target global markets. Naver’s financial performance in Q2 2023 included revenue of 2.6501 trillion won and an operating profit of 434.8 billion won, while Kakao recorded revenue of 2.0643 trillion won and an operating profit of 141.7 billion won. Both companies are making substantial investments in AI technologies to drive innovation. Naver’s AI platform 'Sovereign AI' targets global markets, and Kakao focuses on user-centered AI through 'AI as a Service'. Naver Webtoon’s successful Nasdaq listing underscores its expansion, with recent collaborations with Netflix to produce original series.

  • 2-6. SionicAI: Achieving Enterprises Optimization via AI Middleware Platform

  • SionicAI introduced its generative AI middleware platform in 2023, securing 5.5 billion won in seed funding. The company’s platform includes products like 'STORM Platform', 'STORM Answer', and 'Analyze', which address practical roles such as answering questions and providing summaries and sentiment analysis. SionicAI aims for global expansion into markets like Japan and Southeast Asia, delivering enterprise-customized AI solutions to maximize client value.

3. Financial Performance and AI Competitiveness of Naver and Kakao in 2023-2024

  • 3-1. Naver's Financial Performance in Q2 2023

  • In the second quarter of 2023, Naver exhibited steady growth. According to FN Guide, Naver's revenue amounted to 2.6501 trillion KRW, while operating profit was 434.8 billion KRW. Despite a slight decrease in operating profit from the previous quarter, revenue growth was maintained, driven primarily by the advertising and commerce sectors. Notably, the Nasdaq listing of Naver Webtoon’s parent company, Webtoon Entertainment, and the growth in its advertising business were key contributors to its strong performance.

  • 3-2. Kakao's Financial Performance in Q2 2023

  • Kakao’s performance in the second quarter of 2023 exceeded expectations. According to FN Guide, Kakao reported a revenue of 2.0643 trillion KRW and an operating profit of 141.7 billion KRW. While revenue remained consistent with the same period last year, operating profit improved. The growth was largely driven by the ads in its KakaoTalk Biz Board (Talk Biz) and overall advertising revenue. However, other sectors such as fintech, mobility, and webtoon business sectors experienced lower growth rates.

  • 3-3. Analysis of AI Capabilities: Hyper CLOVA X and KoGPT 2.0

  • Naver and Kakao are making significant strides in AI technology, each adopting unique strategies. Naver has introduced the 'Hyper CLOVA X' AI model and has been integrating it into various services such as enhanced home feed and AI recommendations. Additionally, Naver is developing the 'Sovereign AI,' optimized for local cultural and linguistic contexts. Conversely, Kakao has been focusing on developing its 'KoGPT 2.0' model and has established a dedicated AI team named 'Kanana,' merging it with Kakao Brain. This strategic focus aims to enhance the AI features in their suite of services, including KakaoTalk.

  • 3-4. Internal Risks and Market Changes Faced by Naver and Kakao

  • Both Naver and Kakao face several internal risks and market changes. For Naver, upcoming regulatory changes and competition in the AI space pose significant risks. They have to navigate through the competitive landscape dominated by global tech giants. Kakao faces substantial internal challenges, including the legal issues surrounding its founder, Kim Bum-soo. These judicial risks and problems in non-advertising sectors like fintech and mobility need addressing. Additionally, delays in seller settlements at TMON and WeMakePrice have influenced market perceptions, potentially pushing more General Merchandise Volume (GMV) towards Naver.

4. Nasdaq Listing of Naver Webtoon and Its Corporate Value Prospects

  • 4-1. Nasdaq Listing Announcement and Share Price Performance

  • Naver Webtoon officially announced its Nasdaq listing on July 31, 2023, by submitting a securities registration statement to the U.S. Securities and Exchange Commission (SEC). The company's North American entity, Webtoon Entertainment, will trade under the ticker 'WBTN'. The share public offering price range is set at $18 to $21 per share. Through this initial public offering (IPO), Naver Webtoon aims to raise up to 315 million dollars. The projected corporate value after the listing could reach up to 3.7 trillion won.

  • 4-2. Naver's Shareholding and Strategic Moves Post-Listing

  • After the listing, Naver will retain a 63.4% stake in Webtoon Entertainment, maintaining control as the major shareholder. Line Yahoo will hold a 24.7% stake, remaining a significant shareholder. Additionally, Naver's U.S. subsidiary, Naver Yuhub, has agreed to purchase $50 million worth of Webtoon Entertainment shares. This structure ensures that Naver's influence and decision-making power remain intact while strategically expanding in overseas markets.

  • 4-3. Expansion Plans in the North American Market Through IP Business

  • Naver Webtoon plans to utilize the funds raised from the Nasdaq listing to expand its intellectual property (IP) business in the North American market. They aim to enhance marketing efforts and invest in the monetization of web novels and webtoons by transforming them into visual entertainment. The company has already acquired Wattpad, the world's largest web novel platform, to secure competitive content. This strategic approach underscores Naver Webtoon's commitment to strengthening its presence and competitive edge in the North American entertainment sector.

  • 4-4. Corporate Value Projections and Potential Market Reactions

  • If the IPO succeeds, Naver Webtoon's corporate value is projected to reach up to 3.7 trillion won, applying the upper limit of the offering price range. Bloomberg and Reuters anticipate Naver Webtoon's potential market value to be between $3 to $4 billion, with a maximum fundraising capability of $500 million through the IPO. Mirae Asset Securities further supports this optimistic view, suggesting that Naver Webtoon's price-to-earnings (P/E) ratio could apply a valuation upwards of 30 times next year's expected earnings, estimating a market capitalization of $3.5 billion.

5. Global Reach and Market Dynamics for Naver Webtoon

  • 5-1. Growth and Performance in Different Markets: Japan, North America, Taiwan

  • Naver Webtoon has demonstrated significant growth and performance across different markets, notably in Japan, North America, and Taiwan. As of the end of last year, the number of Japanese-language local works on Naver Webtoon was 577, an increase of 48% from 2021. Similarly, North America saw a 48% increase in English-language local works to a total of 458 during the same period. The company has also celebrated its 10th anniversary of entering the global market, marking this milestone with significant events in Taiwan and the United States, indicating strong local engagement. In Taiwan, Naver Webtoon's 'LINE Webtoon' was celebrated with a major event in Taipei, drawing many fans and highlighting the platform's dominance in the region as the number one webtoon platform in terms of cumulative sales and monthly active users.

  • 5-2. Cultural Adaptation and Localization of Webtoon Content

  • Naver Webtoon has effectively utilized a 'cross-border' strategy, where proven works from one country are translated and introduced in other countries. This approach has led to a virtuous cycle of increasing users globally and growing global intellectual property (IP). For example, the Japanese-language webtoon 'Why Did the Count's Daughter Disguise Herself as a Boy?' was translated into English and quickly became the second most traded English service in the United States within a month of its launch. Naver Webtoon's cultural adaptation efforts have been notably successful in markets such as Japan, North America, and Taiwan, where local works and translated content have flourished. This strategy allows local artists to increase their earnings by reaching broader audiences.

  • 5-3. Impact of Webtoon Products on Global Content Ecosystem

  • Naver Webtoon's influence on the global content ecosystem is profound, with its webtoons and derived content gaining popularity worldwide. In Japan, several Naver Webtoon-based animations have achieved remarkable success. For instance, the animation 'Fight Study' ranked fifth in Japan's TV show top ten on Netflix. In North America, webtoons such as 'Lore Olympus' have received prestigious awards like the Eisner Award for Best Webcomic for three consecutive years. The company also participated in global events such as San Diego Comic-Con and Taiwan's LINE Webtoon 10th anniversary celebration, further boosting its global footprint. Additionally, the successful translation and adaptation of local webtoons create a continuous cycle of increasing user engagement and local artist participation, thereby strengthening Naver Webtoon's position in the global content ecosystem.

  • 5-4. Investments and Market Strategies by Major Investment Banks

  • Naver Webtoon's strategy and market performance have caught the attention of major investment banks. Goldman Sachs initiated coverage with a 'buy' rating and set a 12-month price target of $62 per share, highlighting the company's revenue potential from paid content and intellectual property (IP) expansion in the North American market. This outlook was echoed by other investment banks such as Evercore and Deutsche Bank. Furthermore, significant investments from major financial entities like BlackRock, which acquired $50 million worth of shares, underscore strong investor confidence in Naver Webtoon's long-term growth prospects. These investments are expected to fuel further expansion into regions like Europe, reinforcing Naver Webtoon's standing as a global player in the webtoon industry.

6. Conclusion

  • The report effectively illustrates the substantial progress and strategic initiatives taken by leading AI and ICT companies like KT Skylife, LG CNS, LS Electric, Samsung Electronics, Naver, and Kakao. Key findings emphasize the critical role of AI in driving innovation, competitiveness, and market expansion. For instance, Naver's and Kakao's robust financial performance in 2023, coupled with their extensive investment in AI technologies, highlights the sector’s dynamic growth. Naver Webtoon's Nasdaq listing marks a pivotal moment, accentuating the global relevance and potential of Korean digital content. However, the report also identifies challenges such as internal risks and market changes that these companies need to navigate. Looking forward, continuous innovation and adaptation will be paramount for sustaining growth and gaining a competitive edge. The practical applicability of these advancements, particularly for global market integration and enhanced user experiences, underscores the transformative potential of AI in the ICT sector.

7. Glossary

  • 7-1. KT Skylife [Company]

  • KT Skylife integrates AI-based media solutions in broadcasting, improving sports content delivery and viewer experience.

  • 7-2. LG CNS [Company]

  • LG CNS collaborates with Japanese language institutes to develop AI-powered tutor applications, enhancing language learning.

  • 7-3. LS Electric [Company]

  • LS Electric focuses on the deployment of smart factories to increase productivity and energy efficiency.

  • 7-4. Samsung Electronics [Company]

  • Samsung leverages AI technologies in semiconductors and home appliances, strengthening its market position.

  • 7-5. Naver [Company]

  • Naver, a leading tech company, drives global market penetration and growth through AI advancements and digital content.

  • 7-6. Kakao [Company]

  • Kakao showcases robust financial performance and AI-driven growth strategies despite facing internal and market challenges.

  • 7-7. Naver Webtoon [Company]

  • Naver Webtoon, a subsidiary of Naver, recently listed on Nasdaq, illustrating significant potential in global digital content markets.

8. Source Documents