Kakao Corp shares tumbled after a data center fire disrupted service at the Internet giant over the weekend, intensifying scrutiny of its outsized importance in Korean life.
The company’s stock dropped as much as 9.5 percent to the lowest since May 2020 before closing 5.9 percent lower. It was one of the biggest drags on the benchmark KOSPI yesterday, along with affiliates Kakaopay Corp and KakaoBank Corp.
The blaze halted messaging, payment, gaming and other popular services for hours on Saturday.
Photo: Reuters
Kakao said that as of yesterday morning, major services of KakaoTalk, South Korea’s No. 1 messaging app, had been mostly restored, while mail and map services remained limited.
KakaoBank said that all of its services had returned to normal.
The incident drew further criticism of the nation’s dependence on the group, which has met with public complaints and regulatory crackdowns over its market dominance after rapid growth. Kakao’s stock is nearly 60 percent lower this year, while KakaoBank has shed more than 70 percent and Kakaopay has plunged 80 percent.
“We will do our best to improve until the services are fully recovered,” Kakao said yesterday.
The firm expects the disruption to have a limited impact on its revenue, it said in a regulatory filing.
South Korean President Yoon Suk-yeol on Sunday ordered the government to support recovery of operations and called for an investigation into the cause of the incident.
“Although the network is run by a private company, it’s practically national communications infrastructure,” he said yesterday.
“If a monopoly or an oligopoly causes market distortions and acts like national infrastructure, I think the government should take action,” he said.
The presidential office said it would establish a cybersecurity task force led by Yoon’s national security director, as the incident was “a matter of national security.”
Lawmakers slammed Kakao for the lack of a contingency plan and said that they could roll out new regulations, including revising the existing broadcasting communications development law.
“It has solely engaged in reckless business expansion such as M&As and IPOs,” ruling People Power Party spokeswoman Yang Kumhee said, referring to initial public offerings by several Kakao units in the past few years.
“If the principal of self-regulation leads to a loss of such, there is no choice but to reconsider the government’s management and supervision methods,” she said.
Some analysts see a negative impact on Kakao’s fourth-quarter earnings as it might have to compensate for service disruptions and rivals gaining traction.
The incident is also seen worsening sentiment toward Kakao and its affiliates, which have high ownership among the nation’s day traders.
“The incident comes as public opinion is low on Kakao, as share prices have slumped since last year and some executives have sold shares at affiliates after going public,” NH Investment & Securities Co analyst Ahn Jae-min said. “We expect the short-term sentiment toward Kakao could be negative.”
RUN IT BACK: A succesful first project working with hyperscalers to design chips encouraged MediaTek to start a second project, aiming to hit stride in 2028 MediaTek Inc (聯發科), the world’s biggest smartphone chip supplier, yesterday said it is engaging a second hyperscaler to help design artificial intelligence (AI) accelerators used in data centers following a similar project expected to generate revenue streams soon. The first AI accelerator project is to bring in US$1 billion revenue next year and several billion US dollars more in 2027, MediaTek chief executive officer Rick Tsai (蔡力行) told a virtual investor conference yesterday. The second AI accelerator project is expected to contribute to revenue beginning in 2028, Tsai said. MediaTek yesterday raised its revenue forecast for the global AI accelerator used
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has secured three construction permits for its plan to build a state-of-the-art A14 wafer fab in Taichung, and is likely to start construction soon, the Central Taiwan Science Park Bureau said yesterday. Speaking with CNA, Wang Chun-chieh (王俊傑), deputy director general of the science park bureau, said the world’s largest contract chipmaker has received three construction permits — one to build a fab to roll out sophisticated chips, another to build a central utility plant to provide water and electricity for the facility and the other to build three office buildings. With the three permits, TSMC
TEMPORARY TRUCE: China has made concessions to ease rare earth trade controls, among others, while Washington holds fire on a 100% tariff on all Chinese goods China is effectively suspending implementation of additional export controls on rare earth metals and terminating investigations targeting US companies in the semiconductor supply chain, the White House announced. The White House on Saturday issued a fact sheet outlining some details of the trade pact agreed to earlier in the week by US President Donald Trump and Chinese President Xi Jinping (習近平) that aimed to ease tensions between the world’s two largest economies. Under the deal, China is to issue general licenses valid for exports of rare earths, gallium, germanium, antimony and graphite “for the benefit of US end users and their suppliers
Dutch chipmaker Nexperia BV’s China unit yesterday said that it had established sufficient inventories of finished goods and works-in-progress, and that its supply chain remained secure and stable after its parent halted wafer supplies. The Dutch company suspended supplies of wafers to its Chinese assembly plant a week ago, calling it “a direct consequence of the local management’s recent failure to comply with the agreed contractual payment terms,” Reuters reported on Friday last week. Its China unit called Nexperia’s suspension “unilateral” and “extremely irresponsible,” adding that the Dutch parent’s claim about contractual payment was “misleading and highly deceptive,” according to a statement
RSS