▲ 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 tailored news items for each reader type.
[Key Issue Briefing]
■ AI Investment Backlash: Morgan Stanley projected capital spending by hyperscalers — operators of large-scale data centers — and neoclouds, or AI-focused cloud providers, at $1.58 trillion next year, signaling a 60% surge from $980 billion this year. With revenue failing to keep pace with the speed of investment, the free cash flow deficit including leases is expected to peak at $540 billion next year. The disclosure that an Amazon Web Services executive told an internal meeting that "the FCF deficit in the AI business could continue for the next two years" has caused a stir.
■ Fuel Cell Infusion: Doosan Fuel Cell (336260.KS) won 823.6 billion won in orders for fuel cells for U.S. AI data centers, yet still approved the issuance of 300 billion won in perpetual convertible bonds and 100 billion won in perpetual bonds with warrants. Because the contract structure provides only 20% of the amount as an advance payment, the company must first pour money into raw materials and production — leaving its coffers emptier even as it captures a growth opportunity.
■ Fiscal Dominance: As government bond yields climb worldwide, calls have grown for central banks to act as "watchdogs" of national fiscal soundness. With the U.S. 30-year Treasury yield spiking to 5.31% this month and the French 10-year rising to 4.925%, concerns are spreading through international financial circles that fiscal burdens could narrow the room for monetary policy in a vicious cycle.
[News of Interest for Corporate CEOs]
1. "Big Tech Free Cash Flow to Hit Worst Level Next Year; AWS Also Negative for Two Years"
- Key summary: A forecast has emerged that Big Tech cash flows will reach their worst level next year as AI infrastructure investment swells to astronomical scale. Morgan Stanley, in a report on the 19th, projected capital spending by hyperscalers and neoclouds at $1.58 trillion next year. It analyzed that operating cash flow would rise by only $240 billion, leaving a free cash flow deficit of $540 billion including leases. The analysis covered not only Microsoft, Amazon, Alphabet and Meta but also Oracle, SpaceX, CoreWeave and Nebius. Controversy grew after a transcript of an internal AWS meeting obtained by Business Insider revealed that Prasad Kalyanaraman, the executive in charge of AI infrastructure, said "the FCF deficit in the AI business could continue for the next two years." Standard & Poor's noted that hyperscalers' actual debt may be larger than known, while Goldman Sachs reported that hedge funds are cutting their exposure to technology stocks at the fastest pace in a decade.
- Key summary: Doosan Fuel Cell succeeded in winning large-scale orders in the U.S. AI data center market, but has moved to raise 400 billion won as its financial structure deteriorated on accumulated losses and rising borrowings. At a board meeting on the 13th, it approved the issuance of 300 billion won in perpetual convertible bonds and 100 billion won in perpetual bonds with warrants. The payment date is Nov. 12 and the maturity is 2056, with 300 billion won to be used for operating funds and 100 billion won to repay existing borrowings. Consolidated current liabilities stood at 680.9 billion won at the end of June, up 47.1% in six months, and short-term borrowings surged nearly fourfold from 76 billion won to 285 billion won, while cash and cash equivalents amounted to only 34.8 billion won. Meanwhile, first-half revenue fell 17.1% to 189.1 billion won and the operating loss widened to 52.2 billion won, as lower utilization from a gap in solid oxide fuel cell orders coincided with costs to replace phosphoric acid fuel cell stacks. Meritz Securities emphasized the removal of funding uncertainty, but NICE Investors Service voiced concern that "considering the call option and the rising interest rate terms, the actual debt burden could increase over the short to medium term." NICE maintained its BBB credit rating on the unsecured bonds in June while changing the rating outlook to "negative" from "stable."
3. Kakao (035720.KS): "Block Deal, Third-Party Share Issue and Affiliate Sale Are Groundless"
- Key summary: Kakao flatly denied rumors of a block deal, a third-party allotment share issue and an affiliate sale at its second meeting with minority shareholders this year, held ahead of a planned spin-off. Chief Financial Officer Shin Jong-hwan said at the FKI Tower in Yeouido, Seoul, on the 20th that "a block deal is groundless and could not even happen," and also drew a line under the third-party allotment issue, saying the company had never even considered it. Kim Do-young, the designated head of Kakao X, stressed that the split has nothing to do with selling affiliates. On the 64-to-36 split ratio, the CFO explained that it was based on net asset value under accounting standards in the Commercial Act and the Capital Markets Act. After the split, Kakao X will use dividends from affiliates and 30% of investment gains as a source of shareholder returns and will pursue the buyback and cancellation of 300 billion won in treasury shares, while Kakao AI will return 20% to 35% of adjusted free cash flow and raise the ratio to as much as 40% if FCF grows more than 50% from the previous year. Whether the spin-off proceeds is expected to be decided at an extraordinary shareholders meeting in December.
[Reference News for Corporate CEOs]
4. "Give Us 15% of Operating Profit": Micron's Taiwan Union to Strike on the 22nd
- Key summary: The union at the Taoyuan plant in Taiwan of U.S. memory chipmaker Micron will go on strike on the 22nd. According to Reuters, the Taoyuan union approved the strike with 88.3% in favor in a member vote, while the Taichung union has not yet held a vote and plans to reach a conclusion with management on the same day, making the 22nd a watershed for a general strike. Micron last month offered Taiwan production workers a compensation package worth 35 to 68 months of base pay, but the union is demanding a one-time bonus equivalent to 83 months of wages and a permanent incentive system distributing 15% of operating profit. The aim is to secure a performance-linked profit-sharing framework like those at Samsung Electronics (005930.KS) and SK hynix (000660.KS). Micron employs about 15,000 people in Taiwan and secures 50% to 60% of its chip output there, and with the two sites' unions representing more than 80% of local staff, the possibility of disruption to production operations has been raised.
- Key summary: Amid surging government bond yields, the argument that central banks should take on the role of monitoring fiscal soundness is gaining ground in international financial circles. The Official Monetary and Financial Institutions Forum, a British think tank, noted in a contributed article that a rapid rise in national debt could lead governments to press for rate cuts or bond purchases, undermining the independence of monetary policy, citing the case of U.S. President Donald Trump pressing the Federal Reserve for a 3 percentage point cut. KPMG also assessed that long-term yields would stay at high levels because of expanded U.S. Treasury supply and rising interest costs. Net interest costs for the U.S. federal government in fiscal 2026 are approaching $1 trillion. The U.S. 30-year Treasury yield hit 5.31% this month, the highest since 2007, and the French 10-year yield also jumped to 4.925% on the 19th. In South Korea, Bank of Korea Governor Shin Hyun-song said at a parliamentary audit on the 12th that he would continue to voice views on fiscal sustainability.
6. DeepSeek Takes Top Open-Source Spot in Web Development, Beating Kimi K3 and GPT-6 Astra
- Key summary: V4.1-Flash-1017, a new model released by China's DeepSeek on the 17th, took first place among open-source models in the web development coding performance evaluation on the AI evaluation platform Arena. It beat not only Moonshot AI's Kimi K3 but also some closed U.S. models, including OpenAI's GPT-6 Astra, Anthropic's Claude Opus 5 and xAI's Grok 4.7. Its bigger strength is price: the fee is just $0.6 per million output tokens during off-peak hours, one-33rd that of GPT-5.6 Sol ($20) and one-42nd that of Claude Opus 5 ($25). Arena assessed that it had entered the "Pareto frontier," meaning no model offers higher performance at lower cost. However, with parameters — the value indicating the size of an AI model — reaching 763 billion, it is an ultra-large model that is difficult to run on a personal computer, requiring the use of the official or a third-party API.
