Apple's Automation and AI Impact on Jobs

Apple plans to automate iPhone assembly, impacting jobs and labor market, while facing legal and economic challenges.

### Apple Considers Automating iPhone Production; AI Jobs Market and Lotte Duty-Free's Crisis
* 📱 Apple is reportedly considering automating the iPhone assembly process to **reduce the workforce by half**, with the background being **large-scale protests at Foxconn**, Apple's largest partner's assembly plant in China.
* 🤖 Predictions suggest that the labor market will develop a dual structure due to AI, with jobs related to AI technology paying **more than 25% higher** than similar jobs.
* 📉 Apple is facing a crisis in Europe, where it may have to pay fines equivalent to **10% of its global revenue** for violating digital market laws.
* 📈 The S&P 500 and Nasdaq indices rose due to **Nvidia's stock price rebounding**, while the Dow Jones index showed a decline following a **0.9% drop in the U.S. Consumer Confidence Index**.
* 💰 Despite concerns about excessive speculation and a bubble forming, Nvidia's stock price is being revised upward, with **more optimism about the future outlook**.
* 🏢 Lotte Duty-Free, the top company in the domestic duty-free industry, declared an emergency management strategy to enhance productivity through initiatives such as **voluntary retirement, job transition, and performance improvement training**.
* 🛍 The duty-free shop industry in Korea is undergoing structural adjustments due to **increasing competition**, **rising commissions given to attract group tourists**, and the **intensifying competition from e-commerce companies**.

We will deliver the latest economic news quickly and kindly. Start Economy today, we are joined by Professor Seok Byeong-hoon from Ewha Womans University's Department of Economics. Please come in. Hello. Welcome. Now, Apple is reportedly considering automating the iPhone assembly process to reduce workforce by half. This news comes from the U.S. There seems to be some background to this. Yes, the background is related to the issue of wages for workers at Foxconn, Apple's largest partner's assembly plant in China in November 2022. Then, there were large-scale protests against China's strict COVID-19 prevention policies. During the protests, clashes with the police occurred, causing disruptions in the iPhone production process. As a result of these protests, at that time, Apple's Senior Vice President of Operations instructed managers to improve labor conditions in the final assembly process for iPhones.

It was reported that the instruction to reduce costs by 50% served as a catalyst for the current push for automation. Apple is known to be investing a significant amount of funds in establishing automation systems. With this development coming soon, there are expectations that AI might replace some of our jobs. In fact, predictions that the labor market will develop a dual structure due to AI are spreading. Companies like Apple have acquired AI companies last year and earlier this year, such as Turi and Xnor.ai, which seem to have been acquired for the purpose of automating production. Therefore, it appears that each company is performing tasks such as real-time identification of process bottlenecks or inspecting parts in the manufacturing process. As a result, the number of employees monitoring in Apple's partner companies is also...

In 2022, the number decreased from 1.6 million to 1.4 million last year. In reality, the labor market related to AI is being reorganized. Some jobs like monitoring personnel are being replaced by AI. On the other hand, jobs related to AI technology are paying more than 25% higher than similar jobs. In general, companies are competing to attract talent in places where AI technology exists. Not only are new jobs related to AI being created, but also positions such as AI content strategist, AI education consultant, etc., are being newly generated. Therefore, there will be an accelerated dual structure in terms of jobs related to people who know AI and those who do not know AI. However, in the past, whenever new technologies were developed, there were concerns that these technologies would eliminate jobs.

In fact, more jobs related to the new technology have been created, so although there may be some increase in unemployment in the short term during the implementation process, in the long run, more new jobs utilizing AI technology will be created. Therefore, policies that minimize unemployment during this implementation process are needed. For example, Apple is facing a crisis as it seeks to transform its production structure. It is currently facing a crisis where it may have to pay fines equivalent to 10% of its global revenue in Europe. The reason for this is that the European Union notified Apple of preliminary investigation results, stating that they violated digital market laws in order to prevent the abuse of power by big tech companies in the operation of the Apple App Store. Consequently, developers distributing apps through the Apple App Store may actually incur additional costs to customers without any additional fees.

We need to inform how to purchase the app in that manner, but currently, Apple claims to operate three types of business rules and suggests this method. However, from the perspective of reasons, it seems inappropriate to app developers as it imposes excessive fees. It is not suitable as an alternative method. This is just a preliminary investigation result, and the final investigation result is scheduled to confirm the sanction level on March 25 next year. If this is confirmed, a fine of up to 10% of the global revenue is expected to be imposed. However, despite this result, Apple's stock price is actually rising, leading the market to believe that this will not be a significant threat to Apple. Apple is lowering fines.

Another legal battle is expected to continue, so we need to keep an eye on it. As you mentioned, the stock price of F rose by 0.45% at the close. If we continue to look at the New York Stock Exchange, the S&P 500 and Nasdaq indices have risen for four consecutive trading days. Yes, that's right. While the S&P 500 and Nasdaq indices rose, the Dow Jones index showed a decline. The main reason for the rise in the S&P 500 and Nasdaq indices is that Nvidia's stock price rebounded by 6.76%, driving up the stock prices of AI-related companies. On the other hand, the slight decline in the Dow Jones index is due to a 0.9% drop in the U.S. Consumer Confidence Index in June. Therefore, the slight increase in consumer anxiety about the U.S. economic outlook has caused some retail companies included in the Dow Jones index to lower their stock prices.

It appears that the increased economic anxiety among American consumers actually resulted in a slight decrease in U.S. Treasury yields. Therefore, the market interest rates in the U.S., which reflect the outlook for the U.S. interest rates most sensitively, also saw a 0.2 BP decrease, recording 4.73%. For example, as you mentioned, NVIDIA recently showed a downward trend, mainly due to profit-taking. Some analysts attribute yesterday's rebound to short-covering buying, indicating an expectation for a continued rally in the future. However, there are also concerns about excessive speculation and a bubble forming. What is your view on this, Professor? Yes, that's correct. On the 18th, MD's stock price hit a record high, followed by profit-taking selling pressure, causing the stock price to drop for three consecutive trading days by 1.33%.

When you add up the decline by the transaction date, it had dropped by 133%. And now, with the influx of rebound buying pressure, um, although it rose yesterday, in fact, it is based on the fact that the rise in AI-related stocks, especially NVIDIA's stock price, has been excessively high due to the AI bubble theory. It rose by 238% just last year, and this year it has risen by over 130%. Oh, so because the increase is too high, it is forecasted that profit-taking sales will continue to pour in. However, despite that, on Wall Street, the target price of NVIDIA is being revised upward from $140 per share to $200, and there is more optimism about the future outlook. This is because AI-related technologies are receiving attention as the key to leading economic growth in the future, and the economic structure is expected to be reorganized around AI. NVIDIA, the core of AI technology.

NVIDIA's outlook remains quite bright as they hold a monopoly on chips. I also see it this way. We should keep an eye on how long and to what extent the AI trend will continue. Let me share a story about a company as a final note. It's about Lotte Group. It seems like the management succession is in full swing. Currently, Shin Yoo-yeol, the eldest son of Chairman Shin Dong-bin of Lotte Group, is showing his presence. There are talks about this. On the other hand, Shin Dong-joo, the former vice chairman of Lotte Holdings, is publicly opposing it. Do you see a possibility of a turnaround? I don't see a high chance of a turnaround. Because even though Shin Dong-joo, the former vice chairman of Lotte Group, holds a significant stake, he still holds a larger stake in Lotte Holdings, with 27.8% of the shares.

I have a 5.96% stake, and more stakes are currently supporting Chairman Shin Dong-bin. Therefore, because Chairman Shin Dong-bin's supporting forces are stronger, the succession process of the management rights seems to be proceeding smoothly. Currently, Vice President Shin Yoo-yeol, who is the eldest son of Chairman Shin Dong-bin, is trying to take office as a registered director at Lotte Holdings. The reason for this is due to the governance structure of the Lotte Group. Through Lotte Holdings, which actually holds a stake in Lotte Hotel, Lotte Holdings holds 19.07% of the shares. Therefore, by taking office as a registered executive at Lotte Holdings to secure management rights, it is possible to hold the management rights of Lotte Hotel, and through Lotte Hotel, reach the management rights of Lotte Group, which is the holding company of Lotte in Korea and Japan.

Due to this, the former executive vice president is trying to appoint as a director of Lotte Holdings, and thus, it seems like they are trying to finalize the transfer of control. For example, now, it was pointed out that the new executive vice president is likely to be appointed as the head of the holding company. Lotte Holdings' Japan general meeting is scheduled to be held soon. There are mixed opinions regarding the return of the former vice chairman in 3 seconds, but in the end, he failed nine times before. They say there is no door that won't open after knocking ten times, but somehow it seems like it won't open this time as well. What do you think? Yes, I don't think it will open either. There are many obstacles. Yes, I also find it difficult this time. Because still, among the major shareholders, although the former vice chairman has a high stake, KwangYoonSa, with a stake of up to 28.14%, is supporting the former vice chairman. However, the rest of the shareholders, excluding that, still

Because they support Chairman Shin Dong-bin, they believe that despite failing nine times in the past, this time will not be different. The succession process is ongoing, but the internal situation at Lotte doesn't seem good. Recently, even Lotte Online, or Lotte On-Air, and the situation at Lotte Duty-Free shops don't seem good. They have embarked on a large-scale restructuring like voluntary retirement. Yes, that's right. Currently, even though the number of foreign tourists has recovered, profitability at Lotte Duty-Free shops is not improving. In fact, despite the recovery of Chinese tourists, profitability at Lotte Duty-Free shops is not improving. So, in reality, the largest customers in the domestic duty-free market are Chinese tourists. However, with China also facing a global economic downturn, high inflation, and exchange rate issues, the Chinese economy is not doing well, leading Chinese tourists to not shop much at Lotte Duty-Free shops. This is why the actual situation at Lotte Duty-Free shops is...

As the outlook that performance will not improve quickly spreads, it eventually led to declaring an emergency management. Therefore, we announced a strategy to enhance productivity by carrying out initiatives such as voluntary retirement, job transition, performance improvement training, etc. starting from the second half of the year. Additionally, executive salaries will be cut by 20%, the number of executives will be reduced, and the business structure will be differentiated. For example, Lotte World Tower branch will completely eliminate the Tower Zone. The Tower Zone was expanded targeting Chinese tourists, but as their purchases have not yet recovered, the decision was made to remove the Tower Zone from this branch. It was also declared to undergo various structural adjustments such as reducing the current 3 headquarters to 1. Lotte Duty-Free is currently the top in the domestic duty-free industry.

But isn't there concern that the top company entering organizational streamlining now could spread throughout the industry? Yes, I believe it will spread throughout the industry. Because until now, in the duty-free shop industry in Korea, the business structure has been, actually, maintaining a somewhat distorted business structure where they attract group tourists, give commissions to travel agencies or guides, and sell products to these group tourists to make a profit. However, in the duty-free shop industry competition intensifies, the commissions given to attract group tourists through travel agencies or guides have been increasing. This has become a major factor deteriorating profitability. Not only that, recently, with the intensifying competition in e-commerce companies, Chinese e-commerce companies have launched a price offensive.

As people are less likely to go to duty-free shops and make purchases directly, the need for it is decreasing. Generally, face-to-face distribution and offline distribution companies are experiencing a deterioration in their business performance. Therefore, considering this overall situation, not only Lotte Duty-Free but also other duty-free shops and the entire offline distribution industry seem to be on the verge of structural adjustments.  
Alright, I understand. We will end here for today. We have been joined by Professor Seok Byeong-hoon from Ewha Womans University's Department of Economics. Thank you for listening. Thank you.

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Apple's Plan to Automate iPhone Assembly and the Impact on the Labor Market

Apple is considering cutting its workforce in half by automating the iPhone assembly process, following protests and disruptions in production at Foxconn's assembly plant in China.

The company's significant investment in automation systems is expected to lead to job replacements and a dual labor market structure due to AI technology.

The rise of AI-related jobs is creating a competitive landscape for talent, with positions in AI technology paying significantly higher than similar roles.

Apple's Crisis in Europe and Its Stock Performance

More jobs related to new technology are being created, offsetting short-term unemployment from AI implementation.

Apple is facing a crisis in Europe due to a preliminary investigation result, potentially leading to a fine of up to 10% of its global revenue.

Despite this, Apple's stock price is rising, indicating that the market is not significantly concerned.

The S&P 500 and Nasdaq indices have been rising due to a rebound in Nvidia's stock price, while the Dow Jones index declined because of a drop in the U.

Economic anxiety in the US led to a slight decrease in US Treasury yields and a 0.

NVIDIA's stock showed a downward trend due to profit-taking, but rebounded with short-covering buying, leading to concerns about a possible bubble.

MD's stock price also experienced fluctuations, with a record high followed by a drop and then a rebound, driven by optimism about the future outlook of AI-related technologies, particularly for NVIDIA.

The management succession within Lotte Group is ongoing, with Shin Yoo-yeol's emergence and opposition from Shin Dong-joo, but the possibility of a turnaround seems low due to the latter's larger stake in Lotte Holdings.

Power Struggle for Management Rights at Lotte Group

Chairman Shin Dong-bin's strong support is facilitating the smooth succession process for management rights.

Vice President Shin Yoo-yeol is seeking a director position at Lotte Holdings to secure management rights and control of Lotte Hotel, in an effort to ultimately gain control of Lotte Group.

The company is facing internal challenges and a struggling performance in its duty-free shops, attributed to the poor economic situation in China.

Lotte Duty-Free Announces Major Restructuring

Lotte Duty-Free is implementing a strategy to enhance productivity, including initiatives like voluntary retirement and job transition.

The company plans to cut executive salaries, reduce the number of executives, and undergo various structural adjustments, such as eliminating the Tower Zone from its Lotte World Tower branch.

The restructuring is expected to have a widespread impact on the duty-free shop and offline distribution industries in South Korea, driven by factors like increasing competition and a decrease in the need for face-to-face distribution.