Release of Activists Detained in Israel.

• The Israeli Foreign Ministry stated, “We hope this matter does not affect South Korea–Israel relations.”
• “This matter” refers to both: first, Israel’s detention of two South Koreans aboard a Gaza aid ship, and second, Lee Jae-myung (President) instructing a review of whether to execute an arrest warrant for Benjamin Netanyahu (Israeli Prime Minister).
• The dominant analysis is that this reflects a shift in attitude, mindful of international criticism.
• Related Link.

What Matters Now.

“Not Starbucks, Right?”.

• Lee Jae-myung (President) visited Ikseon-dong and had a meal at ‘Yajang.’
• He made the remark while ordering coffee at a nearby café, implying he would not drink Starbucks.
• (Yajang refers to Seoul’s street culture or venues where tables and chairs are set outdoors, primarily enjoyed at night.)
• When a citizen mentioned “dining with high oil price support funds,” he responded, “Well done, money should circulate locally.”

Condemning the Glorification of State Violence Crimes.

• Lee Jae-myung (President) emphasized, “Wrong history must be corrected to prevent tragedies from repeating.”
• The remark targeted Starbucks’ Tank Day event.
• The Ministry of the Interior and Safety decided to stop using Starbucks Korea products.

Annual Salary 100M + 600M Bonus = 250M in Taxes.

• An annual salary of 100 million won results in a taxable base of 80.75 million won, with a 24% tax rate applied, yielding a final tax amount of 12.74 million won.
• Adding a 600 million won performance bonus raises the taxable base to 675.5 million won, applying a 42% tax rate and increasing the final tax amount to 247.19 million won.
• The same applies when compensation is paid in company stock instead of cash: the gross amount is taxed, and shares are issued equivalent to the net value after withholding tax.
• Related Link.

Deep Dive.

N% Allocation as the New Normal.

• Projections suggest that performance-based allocation discussions will spread beyond Samsung Electronics and Nixsem to other companies.
• Conflicts over performance-based payouts are also arising at Kakao, Hyundai Motor, HD Hyundai Heavy Industries, LG Uplus, and Samsung Biologics.
• Kim Woo-chan (Professor, Korea University) forecasted, “Sharing performance with subcontractors will also become a major issue.”
• Hong Sung-guk (Chair, Democratic Party National Economic Advisory Council) stated, “Companies that rarely paid dividends will have no choice but to do so more frequently in the future.”
• In an editorial, Dong-A Ilbo warned, “Unreasonable demands for distribution and unchecked social conflict could become a ‘national ruin disease’ that undermines economic strength.”
• In its editorial, The Hankyoreh noted, “A rational and sustainable allocation standard must be considered—one that balances compensation for workers’ contributions, shareholder profits, and resource accumulation for future investment.”
• Related Link.
• Related Link.
• Related Link.

Deferred Distribution Conflicts.

• Social allocation remains a pressing issue. There are calls to distribute performance gains to subcontractors and partner company workers.
• “Discussions must extend beyond short-term compensation to address social distribution and industrial ecosystem-level reforms,” one critique noted.
• Industry-specific bargaining structures are a key policy challenge for the Lee Jae-myung administration.
• Kim Sung-hee (Korea University Professor) stated, “We must begin discussing how to socially allocate excess profits in the AI and robotics era.”

KOSPI 7815.

• This year alone, the buying-side circuit breaker has been triggered nine times.
• Samsung Electronics rose 8.5% to 299,500 won. SK Hynix also surged 11.2% to 1.94 million won.
• The upward momentum grew as foreign investors’ net selling eased.
• US markets edged up yesterday: the S&P 500, Dow, and Nasdaq gained 0.17%, 0.55%, and 0.09%, respectively.

4,588 Students Ace All Subjects in School Records.

• This shift emerged after reducing the grading scale from 9 to 5 levels.
• The pressure is so intense that missing even one top grade can mean missing medical school.
• Concerns are growing that the system has lost its ability to distinguish student ability.
• An increasing number of students are dropping out to take alternative exams.
• Among university freshmen, those who took alternative exams rose from 1.3% in 2019 to 2.7% in 2024.
• Related Link.

ChatGPT Solves 80-Year-Old Math Problem.

• There is something called Paul Erdős’ planar unit distance problem.
• When marking N points on paper, what is the maximum number of pairs that can be exactly 1 unit apart?
• One might assume a square grid is optimal, but mathematical proof has been elusive.
• It’s been unsolved since 1946.
• Yet ChatGPT discovered a new arrangement (construction) in just 32 hours.
• While some assessments call it closer to a counterexample than a proof, the fact that a general-purpose language model tackled an open math problem is astonishing.
• Related Link.
• Related Link.

Yesterday’s AI Big News Dump.

• Anthropic’s transition to profitability came two years earlier than expected. It recorded $560 million in operating profit for Q2.
• Anthropic agreed to pay $15 billion annually for renting SpaceX’s Colossus (data centers). While Elon Musk (SpaceX CEO) has aggressively expanded investments, Grok’s utilization rate remains low.
• NVIDIA’s revenue surged 85%. Of $81.6 billion, $75.2 billion came from data center sales.
• Jensen Huang (NVIDIA CEO) called it “the largest infrastructure expansion in human history.” He also projected AI infrastructure investments to reach $4 trillion by 2030.
• NVIDIA’s revenue from China is $0. Though Trump brought Jensen Huang along, China showed no interest. Huawei is filling the gap left by NVIDIA.
• Meta (Facebook) decided to lay off 8,000 employees—10% of its workforce. Mark Zuckerberg (Meta CEO) said, “Because success in AI is not guaranteed.”
• Related Link.
• Related Link.
• Related Link.
• Related Link.

Another Take.

National Pension Fund to Increase Korean Equity Weighting.

• Raising the share from 14.9% to 19.9%.
• With a 5 percentage point buffer above the target, the fund could hold up to 25%—currently at 24.6% as of end-February.
• As of end-February, the fund’s assets grew to 1,619 trillion won—an increase of 406 trillion won from 1,213 trillion won at the end of 2024.
• Related Link.

Only Elon Musk Can Fire Elon Musk.

• Confirmed in SpaceX’s IPO filing. There are Class A and Class B shares—removing the CEO requires majority approval from Class B shareholders.
• Yet Elon Musk (SpaceX CEO) owns 94% of Class B shares.
• Class B shares convert to Class A upon sale—except for Elon Musk.
• This effectively makes him CEO for life.
• If SpaceX’s IPO succeeds, he could become the world’s first trillionaire.
• Related Link.
• Related Link.
• Related Link.

Steel Park’s Confirmation Hearing: “Please Look Out for Coupang.”.

• Steel Park’s (U.S. Ambassador to South Korea nominee) confirmation hearing took place. Bill Hagerty (U.S. Senator) said, “Please ensure American companies like Coupang are not discriminated against in South Korea.”
• Steel Park is classified as a close aide who can directly report to Trump at the White House at any time.

Maduro Followed by Castro?

• The U.S. has indicted Raúl Castro (former Cuban Council of State President) for his alleged involvement in the 1995 downing of a U.S. aircraft.
• Miguel Díaz-Canel (Cuban President) called it “a politically motivated stunt with no legal basis.”
• The U.S. has already cut off fuel supplies to Cuba—and a U.S. aircraft carrier is stationed off its coast.
• Todd Blanchard (Acting U.S. Attorney General) declined to compare the case to the arrest of Nicolás Maduro (former Venezuelan President), saying, “I won’t make comparisons.”
• Related Link.

Samseong Station Rebar Omission Case: Whose Account Is Correct?

• Hyundai Engineering & Construction discovered the issue during a quality inspection and reported it to Seoul City last November.
• Seoul City reported it to the Ministry of Land, Infrastructure and Transport only in April this year—making delayed reporting inescapable.
• Seoul City claims it notified the Korea Railroad Corporation, but the ministry countered, “It was like a hidden object game—just one or two pages among voluminous reports.”
• If the construction period extends by five months, the government’s compensation for losses will balloon from 120 billion won to 160 billion won.
• Jeong Won-o (Democratic Party Seoul mayoral candidate) insists, “Construction must be halted.” Oh Se-hoon (People Power Party Seoul mayoral candidate) retorted, “It’s trampling on citizens’ desire for swift opening.”
• Related Link.
• Related Link.

The Fix.

The Worst El Niño Is Coming.

• Warnings emerge that Pacific Ocean temperatures could rise to 3.1°C this year.
• This year is problematic, but next year is projected to become the hottest on record.
• Related Link.
• Related Link.

Monthly 150,000 Won Basic Income Boosts Population by 5%.

• 25% of new residents came from the capital region.
• The population of the 10 counties participating in the pilot project increased by 14,635.
• There is also analysis that the basic income compensates for rural structural fixed costs. Rural households spend about 150,000 won more monthly than urban households in essential areas like food, transportation, housing, and fuel. (Based on single-person households.)

A School Where Neither Teachers Nor Students Are Happy.

• 56% of teachers said they have considered changing jobs or resigning. Only 6% responded that they feel respected.
• Students’ depression rates reached 29%, and stress perception hit 41%—dropping briefly during the pandemic before rising again.
• Hong Jin-su (Social Editor, Kyunghyang Shinmun) remarked, “There is no middle ground in Korean schools,” adding, “I wonder if they’ve ever been normal, even temporarily.”
• Related Link.

ICYMI.

JoongAng Ilbo + JTBC Sells Headquarters.

• Coramko Asset Trust was selected as the preferred negotiation partner to liquidate real estate worth 5.5 trillion won.
• The sale and leaseback method will be used—selling first and leasing back the space.
• A JoongAng Group official stated, “This is a proactive, preemptive group-level decision to maximize financial flexibility.”
• Related Link.

100,000 German Automotive Jobs Vanished.

• 100,000 jobs have disappeared since 2019, with an additional 125,000 expected to vanish by 2035. The Wall Street Journal identified three causes.
• First, the transition to electric vehicles was delayed.
• Second, electricity costs are high—double those of the U.S.
• Third, tax burdens are heavy. Germany ranks 30th among 38 OECD countries.
• Related Link.

Top 10 Firms Surpass 50% Export Share.

• First-quarter exports hit a record $219.9 billion.
• Last year’s first quarter was 37%, also driven largely by Samsung Electronics (Samsung Electronics) and SK Hynix (SK Hynix) semiconductor exports.

Tattoo Procedures Not Unlicensed Medical Practice.

• It overturned a 1992 precedent. The Supreme Court ruled that cosmetic tattoos performed by non-medical personnel are not unlicensed medical practice.
• The court determined that tattoo procedures do not require medical expertise or experience.
• The Tattooist Act, which permits non-medical professionals to perform tattoos, passed last September and is set to take effect next October.

Japan Allocates 1 Trillion Won for Drone Procurement.

• Washington plans to procure 1 million units. Russia and Ukraine already possess between 5–7 million.
• Koizumi Shinjiro (Japanese Defense Minister) stated, “Japan must also consider defense suited to new forms of warfare.”
• Speculation suggests imports of U.S.-made kamikaze drones like the Lucas and surveillance drones such as the Guardian.

Is the National Growth Fund an Alternative to FOMO?

• First-come, first-served sales run from today until June 11.
• Over five years, 150 trillion won will be supplied to the advanced industry ecosystem, with 600 billion won allocated for public participation.
• Investments will target 12 sectors: semiconductors, secondary batteries, vaccines, displays, hydrogen, future vehicles, biotech, AI, defense, robotics, content, and critical minerals.
• The goal is to bridge the “valley of death.” The fund aims to provide long-term capital to help companies with technology but struggling to secure large-scale funding survive the scale-up phase.
• The maximum tax deduction limit is 18 million won.
• It is a lump-sum product, and funds will be locked for five years.
• The government will cover up to 20% of losses first. Beyond that limit, investors may incur losses.
• Related Link.
• Related Link.

Worth Reading.

If Surplus Tax Revenue Arrives.

• Kim Yong-beom (Blue House Policy Director)’s argument is flawed. Surplus tax revenue means more taxes were collected than budgeted—it’s more accurate to say “if tax revenue increases.”
• There’s no reason to oppose the principle of using increased revenue to address polarization and strengthen capabilities.
• Kim Tae-il (Korea University Professor) emphasized, “These are not initiatives that require surplus funds—they should be pursued regardless of fiscal conditions.” Government intervention is especially critical in AI transition processes.
• “Proposing policy implementation on the condition that it is designed through social consensus to be fair, transparent, and backed by clear government support and investment.”
• Related Link.

Failure and Mismanagement Must Be Distinguished.

• The National Growth Fund begins sales today.
• If losses occur, the government will cover up to 20%. Tax deductions of up to 18 million won are also available.
• Lee Yoon-soo (Seoul National University Professor) warned, “If the pattern of private investment only following government loss guarantees repeats, it will perpetuate reliance on the state rather than advancing finance.”
• “Investing in innovative firms means failure is normal. The key is not to eliminate failure but to distinguish it from mismanagement. Support must not stop at nurturing advanced industries—the financial sector that identifies and grows their value must also expand. If taxpayer money bears investment risks, the return must be the maturation of private finance.”
• Related Link.

Observing Elections Firsthand Reduces Perceptions of Fraud.

• The Korean Political Science Association survey found a 9 percentage point decline.
• According to Park Sun-kyung (Korea University Professor), “Direct experience did not completely dismantle the wall of motivated reasoning.”
• Among those who initially believed in election fraud, 19% of People Power Party supporters changed their views, while 79% of Democratic Party supporters did.
• The analysis concludes, “Fraud narratives are not mere misunderstandings due to information gaps but deliberate obfuscation driven by extreme partisanship.”
• Related Link.

The Delusion of the Military-Industrial Complex.

• Carrier strike groups and destroyers couldn’t even approach. They couldn’t evade mines or remove them. They were helpless against Iranian drones.
• John Aquilina (U.S. Naval War College Professor) criticized, “Obsessed with sophisticated, expensive weapon systems, they’ve lost the flexibility and innovation central to modern warfare.”
• The U.S. military still operates under the military-industrial complex’s faith in mass bombardment. Ukraine, too, is struggling after blindly following the U.S.
• Kim Jong-dae (former Justice Party lawmaker) warned, “We must no longer cling to the illusion of unconditional superiority in joint operations with U.S. forces.”
• Related Link.

The Crime of Upsetting My Child.

• There’s a reason teachers call school trips “total chaos parties.”
• “Complaints are a recurring theme: if we go, they complain we’re going; if we don’t, they complain we’re not. Too far, too close—it’s never right. Side dishes are inadequate, water wasn’t provided, photos taken by the teacher are unsatisfactory, a student was restrained for disobedience and felt humiliated, or a student was reprimanded for mediating a fight or bullying—all lead to ‘emotional abuse’ complaints or lawsuits.”
• Jeong Jeong-yoon (Hankyoreh Columnist) emphasized, “Before criticizing teachers, we must first address the monstrous system and people who have turned ‘a mere field trip’ and routine educational activities into a career-risking gamble for educators.”
• Related Link.

Could Korea Also Become a Good Bargaining Chip?

• These were Trump’s words regarding Taiwan—implying he might trade Taiwan in negotiations with China if needed.
• What about Korea? The U.S. may shift its approach to the North Korean nuclear issue from deterrence to management.
• Jeong Jin-hwang (Editor-in-Chief, Hankook Ilbo) emphasized, “If nuclear disarmament negotiations proceed regardless of our will, we will permanently face nuclear threats,” adding, “We must explore all means and preparations to ensure our fate is not decided by others.”
• Related Link.

The Trap of Maximizing Shareholder Value.

• Jeong Seung-il (Policy Committee Member, Welfare State Society) warned that shareholder return rate targets could erode companies’ futures.
• “For Samsung Electronics to catch up to TSMC in foundry, it must lower its shareholder return rate below 30% as it did in the past. While unfavorable for short-term investors and retail shareholders, it’s not bad for long-term investors. I think our society should stop overly praising incentives for retail shareholders.”
• “Looking at the past decade, Samsung Electronics reached this level precisely because its shareholder return rate stayed below 30%. By retaining earnings instead of redistributing them, it could continue semiconductor investments. If Samsung had returned 70% of its profits to shareholders since the 1970s–1980s, it might have remained a consumer electronics manufacturer at the level of Vietnam’s manufacturing sector.”
• Jeong proposed, “Industry-wide mandatory retained earnings should be enforced.” The system would require companies to contribute 5% of excess profits to a fund if their operating profit margin exceeds 25%, and 8% if it exceeds 30%. It is a proposal for “a new social pact between management, shareholders (investors), employees (workers), and the state.”
• Related Link.