Kakao to spinoff core biz to strengthen AI capabilities

South Korean tech giant Kakao announced Friday its intention to separate its core business into two entities, KakaoAI and KakaoX, in a bid to bolster its artificial intelligence (AI) capabilities. The decision was ratified during a board meeting, as disclosed in a regulatory filing. The separation is set to be finalized by January 1st of the following year, with KakaoAI slated to resume trading on January 27th.

KakaoAI will oversee the company's widely used messenger service, KakaoTalk, with the objective of evolving into an AI core enterprise by integrating AI technologies into advertising and commerce. The company envisions generating more than 6 trillion won ($4.3 billion) in sales by 2030. The newly formed entity will be overseen by CEO Chung Shin-a.

Conversely, the existing Kakao Corporation will become KakaoX, which will function as the investment arm for future growth opportunities. This includes Kakao's mobile payment services, mobility platform, and entertainment subsidiaries. Shareholders will receive shares in both entities in proportion to their existing investment, with a split ratio of 36:64 for KakaoAI and KakaoX, respectively.

Founder Kim Beom-su is expected to retain his stake in both entities while maintaining a hands-off approach to management and governance. Kim stepped down as chair of Kakao in 2023 and now leads the company's Future Initiative Center. The latest initiative comes as Kakao seeks to accelerate investment in its expanding consumer AI business amidst fierce global competition.