▲ AI PRISM* Personalized Economic Briefing
* Editor's note: AI PRISM (Personalized Report & Insight Summarizing Media) is an artificial intelligence-based personalized news recommendation and summary service developed with support from the Korea Press Foundation. It selects and provides six news items tailored to each reader type.
[Key Issue Briefing]
■ Big Tech's funding war: Combined capital spending at Microsoft, Alphabet, Amazon, Meta and Oracle is projected to reach $945.55 billion in January next year, about six times the level of January 2023. After Meta disclosed it had committed $825 billion to AI infrastructure, its credit default swap premium — the cost of derivatives that hedge against default risk — jumped to 119.3 basis points, turning market sentiment cold within a single day.
■ Easing of AI infrastructure rules: The government is moving to handle permits for AI data centers, the biggest obstacle to building them, through a single one-stop fast-track channel, and to exempt centers outside the greater Seoul area from power grid impact assessments. With the legal framework for robotaxi operators and approval for driverless vehicle sales also in train, regulatory barriers across AI and autonomous driving are being lifted at the same time.
■ Concentration of private equity money: As institutional money flows to large private equity fund managers, the Korea Scientists and Engineers Mutual-aid Association's selection for its rookie league fell through for lack of applicants. In the United States as well, funds of $1 billion or more took 83.4% of total commitments, a record share, leaving newer managers with a harsher fundraising environment.
[News of Interest to Startup Founders]
- Key points: As major tech companies' AI investment grows rapidly, the options available to them — their own cash, corporate bond issuance and circular financing — have been exhausted. According to Reuters, combined free cash flow at Microsoft, Alphabet, Amazon, Meta and Oracle is expected to swing to a deficit of $2.87 billion from $223.11 billion. Meta has committed a total of $825 billion to AI infrastructure, including $355.7 billion in leases not reflected on its balance sheet, an increase of $125 billion in three months. Meta plans to issue non-voting common shares in January next year, while Anthropic and OpenAI are pressing ahead with initial public offerings as planned.
2. Permits for AI Data Centers to Be Handled in One Package; Driverless Car Sales Allowed This Year
- Key points: The Ministry of Science and ICT and the Ministry of Land, Infrastructure and Transport announced measures to rationalize rules on AI data centers and autonomous driving at the second full meeting of the Regulatory Rationalization Committee, presided over by the president, on the 23rd. The science ministry will set up a one-stop fast-track window for permits and exclude unmanned facilities such as server rooms and cooling and power equipment from the calculation of building size. It will also spend 200 billion won next year to support upstream and downstream industries and designate special zones for AI data centers. Bae Kyung-hoon, deputy prime minister and minister of science and ICT, said he would move quickly to discuss tax benefits for leased AI data centers with fiscal authorities, signaling an intent to attract foreign capital.
3. Big Money for Large PEFs, a Drought for New Managers [Signal]
- Key points: In this year's regular commitment program by the Korea Scientists and Engineers Mutual-aid Association, the selection for a private equity rookie league open to managers established within the past five years was halted. Only one manager applied, falling short of the requirement for valid competition, which effectively reflected a low assessment of the chances of raising the remaining 40 billion won of the minimum 50 billion won fund size. Meanwhile, according to PitchBook, 348 U.S. private equity funds raised $222 billion in the first three quarters of this year, with funds of $1 billion or more taking 83.4% of the total. New managers raised only $26.5 billion across 122 funds, about half the 237 funds formed last year.
- Key points: The U.S. Treasury Department on the 22nd local time released implementing rules for a comprehensive outbound investment national security law, tightly restricting Chinese investment in national security-related technologies such as AI and biotechnology. Advanced semiconductors, brain-computer interfaces and biotechnology compounds are covered by the rules, and technologies that could be applied to military, intelligence and mass surveillance uses face stringent review. The Financial Times reported that certain therapies that modify patients' cells or genes, as well as immunotherapies, are banned. The U.S. Department of Defense also secretly set up a Technology Support Office in April to block advanced military technology from hostile states, with classified contract budgets alone estimated to exceed $1.5 billion.
