Global venture capital and employment are increasingly focused on the physical AI sector. In South Korea, a similar trend is emerging, with deep tech companies in semiconductors, manufacturing, and aerospace reporting double-digit employment growth, while the gaming and broader IT sectors are facing layoffs even among large corporations.
On September 8, the venture capital platform The VC released its report on '2026 First Half Employment Trends in Korean Startups.' According to the report, the total employment for 4,790 domestic startups, with verified employment data from 2022 to 2025, reached 191,150 in the first half of this year, reflecting an annual growth rate of just 1.2%. This marks a slowdown from last year's annual growth rate of 1.8%.
The net employment figure, calculated by subtracting departures from new hires, showed a decrease of 454 positions. In terms of pure hiring, the scale has actually declined compared to last year. Even when expanding the scope to 8,003 companies, the situation remains similar, with annual employment growth rates falling below 1% for two consecutive years.
However, the deep tech sector related to physical AI was an exception. The industries with the highest employment growth rates in the first half of this year included manufacturing and chemicals (10.8%, 484 jobs), semiconductors and displays (8.8%, 713 jobs), and aerospace and defense (7.4%, 206 jobs), all closely linked to physical AI.
On an individual company level, RealWorld, an industrial robot AI foundation model firm, doubled its workforce from 41 to 82 employees. FuriosaAI, a semiconductor fabless company, and Rebellion also reported double-digit employment increases of 34.2% and 20.2%, respectively.
The report also highlighted that securing investment significantly influenced employment outcomes. Companies that attracted investment within the past year saw their employment numbers increase by 10.4% compared to the end of the previous year, while those that did not secure funding experienced a 2.1% decline. Notably, companies receiving early-stage investments, such as seed to Series A, recorded the highest employment growth rate at 22.6%. Given the recent trend of a shrinking early investment market, concerns have been raised that this employment creation effect may weaken in the future.
The gaming and content sectors received the worst employment report for the first half of this year. Employment in the gaming sector decreased by 8.9% (839 jobs) compared to the previous year, while the content sector saw a decline of 6.3% (739 jobs). Clover Games filed for bankruptcy in April after a series of unsuccessful new releases, while Kong Studio, once a unicorn, announced voluntary layoffs, reducing its workforce from 413 to 310 employees. Kakao Games' subsidiary XL Games is also reportedly undergoing restructuring, cutting more than 20% of its workforce following voluntary retirement offers.
Large gaming companies are not exempt from these trends. NCSoft reduced its headquarters staff by 1,700 last year, Krafton offered voluntary retirement to 200 employees, and Nexon has halted new hiring while reallocating existing staff as part of indirect restructuring.
According to market research firm Crunchbase, global venture investment in the physical AI sector reached $47.4 billion (521 deals) in the first half of this year, nearly quadrupling from $12 billion in the second half of last year. This amount has already surpassed the cumulative investment of $41.9 billion from 2022 to 2024. Research firm PitchBook also reported that investment in the robotics and physical AI sector hit a record high of $18.6 billion in the second quarter of this year.
In contrast, the gaming industry is entering a cycle of unprecedented layoffs globally. Microsoft announced it would cut an additional 1,600 jobs in its Xbox division, following a previous reduction of the same number. French company Ubisoft and Canadian studio Eidos-Montreal are also implementing significant workforce reductions. Industry estimates suggest that global layoffs in the gaming sector could exceed 14,000 this year, approaching the record high of 15,631 in 2024.
* This article has been translated by AI.
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