General Motors Co (GM) has proposed investing US$2.8 billion into its struggling South Korean operations over the next 10 years and has asked Seoul to provide funds for the investment, a South Korean government official said yesterday.
The plan comes as the Detroit automaker and the South Korean government discuss restructuring options at lossmaking GM Korea, one of the US company’s largest offshore operations.
Last week, GM announced it would shut down a factory in Gunsan, southwest of Seoul, and said it was mulling the fate of its three remaining plants in South Korea.
Photo: EPA
The proposal is on top of a more than US$2.2 billion debt-for-equity swap GM is offering to get financial support and tax benefits from Seoul.
The official with direct knowledge of the matter said GM had asked South Korea to inject funds into GM Korea through state-run Korea Development Bank (KDB), which holds a 17 percent stake in the unit. On that basis, KDB would provide about US$476 million in investment.
However, the official said a close look into GM’s proposal was needed to determine whether the investment plan was sufficient to rescue the unit, which directly employs about 16,000 workers.
South Korean Minister of Trade, Industry and Energy Paik Un-gyu also told the legislature that the government had asked for an audit into GM’s “opaque” management in the country.
“By opaque, we mean the high rate of profits to raw material costs, interest payments regarding loans and unfair financial support made to GM’s headquarters,” Paik said.
Paik said the government needed reassurance from GM on its long-term commitment in the nation before it would commit funds.
GM Korea did not immediately respond to requests for comment.
GM’s decision to close its Gunsan plant was the latest in a series of steps it has made to put profitability and innovation ahead of sales and volume.
GM has since 2015 exited unprofitable markets, including Europe, South Africa and Russia.
It laid out a plan to invest about 3 trillion won (US$2.8 billion) in South Korea and said that KDB, the second-biggest shareholder, should provide about one-sixth of the total, the head of the company’s South Korean union said, citing a plan the company had told union members.
A South Korean lawmaker earlier confirmed that GM had put forward a proposal, including the investment plan and the debt-to-equity swap.
In return, GM requested South Korea take part in financing the investment and raising capital, according to a statement by Jung You-sub, the lawmaker from Bupyeong, where GM runs its biggest factory in South Korea.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts