Bin Salman-Lee Jae-yong 'Seungjiwon Meeting' Replay Possible... Hyundai, SK Also Paying Attention

Samsung C&T and Engineering Highlighted as Saudi Beneficiaries
Chairman Lee Anticipates Major IT Discussions on 5G, AI, and Semiconductors

Potential Collaboration in Hyundai Motor UAM, SK Nuclear Power, and Hydrogen

Crown Prince Mohammed bin Salman Al Saud of Saudi Arabia. (Photo by AP Yonhap News)

[Asia Economy Reporter Moon Chaeseok] Crown Prince Mohammed bin Salman Al Saud of Saudi Arabia is expected to visit Korea on the 17th, sparking heightened interest in the possibility of meetings with business leaders such as Samsung Electronics Chairman Lee Jae-yong. Three years ago, during Crown Prince bin Salman's visit to Korea, the chairmen of the top five conglomerates held a cordial meeting at Seungjiwon, Samsung Group's guesthouse, drawing attention to whether a similar 'surprise meeting' will be repeated this time. Saudi Arabia is currently promoting a 'Giga Project' worth approximately 1,000 trillion won, including the Neom City new town project, as part of its 15-year long-term economic development plan, creating an optimistic atmosphere with boundless opportunities for business collaboration.

According to the business community on the 11th, Crown Prince bin Salman is expected to visit Korea for the first time in over three years since June 26, 2019, after attending the G20 summit in Bali, Indonesia on the 15th and 16th. Crown Prince bin Salman is the figure leading the Neom City new town construction project, which has a budget of 500 billion dollars (approximately 710 trillion won). Saudi Arabia is pushing forward a 'Giga Project' worth 719 billion dollars (approximately 986 trillion won), which bundles 15 projects including Neom City. This is part of 'Vision 2030,' a project aimed at breaking away from the oil-dependent economic structure that the nation’s fate depends on.

For this reason, it is widely expected that Crown Prince bin Salman will actively pursue business collaboration and investment attraction in various IT sectors such as 5G and artificial intelligence (AI) for the smart city, as well as scouting companies to win contracts for Neom City during his visit to Korea. In particular, attention is focused on the possibility of a meeting between major corporate owners leveraging the friendship between Chairman Lee and Crown Prince bin Salman. Previously, on June 26, 2019, Chairman Lee, Hyundai Motor Group Chairman Chung Eui-sun, SK Group Chairman Chey Tae-won, LG Group Chairman Koo Kwang-mo, and Lotte Group Chairman Shin Dong-bin had a cordial meeting with Crown Prince bin Salman at Seungjiwon. Prior to that, Chairman Lee and others attended a luncheon hosted by the Blue House, where they exchanged views on cooperation plans for Vision 2030 and Saudi investments.

Attention is drawn to Chairman Lee’s expertise in Middle Eastern business related to IT infrastructure. About two months after June 26, 2019, he traveled to Saudi Arabia in September of the same year and successfully secured cooperation plans with Crown Prince bin Salman in technology, industry, construction, energy, and smart city sectors. That year, he also spent time with Mohammed bin Zayed Al Nahyan, Crown Prince of the UAE (younger brother of the king), visiting Samsung Electronics’ Hwaseong Campus to observe 5G, big data + AI semiconductor production lines.

While some in the financial investment sector analyze that EPC (Engineering, Procurement, and Construction) affiliates such as Samsung C&T and Samsung Engineering will be 'beneficiaries,' the business community believes Chairman Lee is more likely to engage in discussions necessary for major 'deals' related to smart city projects including 5G, AI, and memory and system semiconductors. Contract awards and construction orders are expected to be handled by the presidents of EPC affiliates.

Two days before Crown Prince bin Salman's visit to Korea three years ago, on June 24, 2019, Chairman Lee held a preliminary meeting with Lee Young-ho, former CEO of Samsung C&T’s construction division, and Choi Sung-an, president of Samsung Engineering, suggesting the possibility of a similar meeting this time as well. In 2019, Chairman Lee also discussed AI, 5G, IoT, and system semiconductors in the context of Vision 2030. Since more tangible results related to Vision 2030 have emerged compared to 2019, there is growing expectation that more concrete investment discussions can take place.

A business community official said, "Chairman Lee may send a message encouraging the presidents of affiliates to aggressively pursue the enormous business opportunities in Saudi Arabia, and Samsung definitely has appealing aspects in the telecommunications infrastructure sector in Saudi Arabia. There are many connections to smart city projects including 5G, memory semiconductors, AI, and TVs."

There is also speculation about possible meetings between Crown Prince bin Salman and heads of other conglomerates such as Hyundai Motor Group and SK Group. For Hyundai Motor Group, it is suggested that Chairman Chung might discuss cooperation plans for future transportation means such as Urban Air Mobility (UAM). Since Chairman Chung is leading business by signing agreements with aviation industries in various countries, Saudi Arabia, which is promoting future city construction, may show interest. Previously, Hyundai Motor Group has been collaborating on carbon-neutral mobility by signing a joint research agreement with Saudi state-owned company Aramco to develop eco-friendly internal combustion engines and fuels.

SK Group is also attracting attention as an active investor in energy sectors such as nuclear power and hydrogen. SK has made a 300 billion won investment in TerraPower, a next-generation small modular reactor (SMR) company founded by Microsoft founder Bill Gates, and SK E&S has established a joint venture with Plug Power in the U.S. for liquefied hydrogen. Several SK affiliates are increasing overseas investments in eco-friendly energy. This has led to speculation that discussions related to hydrogen energy with Saudi Aramco may be underway.

There is also a view that meetings with LG Group Chairman Koo and Lotte Group Chairman Shin are possible.

The government is also proactive. Previously, Land, Infrastructure and Transport Minister Won Hee-ryong said at a meeting with the press corps during his Saudi trip, "If a high-level event between Korea and Saudi Arabia occurs soon, we will form a one-team with the Ministry of Trade, Industry and Energy, Ministry of Culture, Sports and Tourism, and Ministry of SMEs and Startups to make many proposals to the Saudi side." He added, "If a big framework agreement is made at a high level between governments, or between the government and the Public Investment Fund (PIF) or the Neom Corporation, the space for companies to operate will expand."