[Rediscovering Trading Companies] From AI to Eco-Friendly... Trading Companies Drop Their Signs and Bet on New Businesses

AI, Secondary Batteries, Solar Power Focused
SK Networks Mobilizes Subsidiaries
Seeking Stable Revenue Sources for Expansion

Lee Ho-jung, CEO of SK Networks, is presenting the future strategy at a corporate briefing held on the 16th at a hotel in Yeouido, Yeongdeungpo-gu, Seoul. (Photo by SK Networks)

SK Networks, formerly a general trading company, has declared its transformation into a fully specialized artificial intelligence (AI) investment company within three years, aiming to triple its current operating profit. Existing general trading companies like Samsung C&T also plan to increase investments in eco-friendly energy and secondary battery sectors.

According to industry sources on the 19th, SK Networks recently held a corporate briefing for key investors and executives, announcing its strategy to shift into an AI-centered business investment company. The company intends to mobilize not only SK Networks but also the capabilities of its subsidiaries such as SK Magic, Encoha, and Walkerhill. SK Magic established an AI division earlier this year. Encoha, a data management company, and Walkerhill will also actively utilize AI. The strategy involves direct investment in AI as well as enhancing the AI capabilities of its subsidiaries to create synergy effects. Lee Ho-jung, CEO of SK Networks, newly set the company’s vision as ‘Civilization of Humanity through AI Democratization’ and emphasized, “If the innovation of business models at headquarters and investee companies, along with the discovery of new growth engines in AI and robotics, are linked, we will achieve an operating profit of 700 billion KRW by the end of 2026, which is three times the current level.”

SK Networks has been preparing for this transformation by investing 250 billion KRW in domestic and international startups over the past five years. On the 31st of last month, it signed a memorandum of understanding for the ‘SK Networks Renaissance Project’ with the U.S. investment firm Bow Capital, pledging to focus investments in the AI sector. In the first half of last year, it invested 22 million USD (approximately 29.4 billion KRW) in Humane, an AI-based device and software platform company.

The scope of transformation among trading companies has expanded. Some are directly establishing mines or factories and partnering with battery companies to build ecosystems.

POSCO International early on changed its label from ‘general trading company’ to ‘general business company.’ It is expanding its business centered on eco-friendly energy, mobility, and secondary battery materials. In October last year, it established a factory in Mexico producing electric vehicle drive motor cores, and the merger with POSCO Energy also signals a reorganization of its energy business. The strategy is to diversify revenue sources by expanding the energy business value chain to include production, storage, and power generation. It has pledged to invest 1 trillion KRW in the energy sector since the beginning of the year.

LX International, whose operating profit has halved, is focusing on eco-friendly sectors. This year, it plans to concentrate particularly on the secondary battery business. Early this year, it invested 133 billion KRW to acquire a 60% stake in the Indonesian AKP mine. This mine extracts nickel, a key material for electric vehicles, reportedly containing enough reserves to produce 7 million electric vehicles. The companies ‘Poseung Green Power’ and ‘LX Glass (Korea Glass Industry),’ acquired between 2022 and 2023, are also planned to be developed as stable revenue sources to offset volatility in existing businesses.

Samsung C&T is also focusing on solar power development projects to enhance profitability. Last year, profits from solar power sales reached 58 million USD, a 20.8% increase compared to the previous year. This marks three consecutive years of growth since the 2021 sale realization. The existing 16.2 GW pipeline is planned to be expanded to a total of 20 GW this year. Additionally, it is pursuing the establishment of a used battery recycling plant in Germany, aiming to start operations next year.

An industry official explained, “The operating profit margin of the trading business is just over 5%, and intermediary trade is highly volatile depending on surrounding market conditions, so finding stable revenue sources through new businesses has become essential in the industry. This year, efforts to differentiate each trading company will accelerate further.”

This content was produced with the assistance of AI translation services.