Yahoo’s latest cost-cutting measure is a big one – the company will shut down its operations in South Korea by the end of the year. In an internal memo sent late Thursday night (Pacific time), Rose Tsou, Yahoo’s senior vice-president for Asia Pacific, announced the closure in the face of “serious and growing challenges.”

Yahoo launched its Korea office as a joint venture with Softbank Korea in 1997. It quickly became one of the country’s most popular websites, behind dominant portals Naver and Daum, but ultimately failed to rise to the top. However, in recent years, the company has faded into almost non-entity status in Korea. Google has recently made serious in-roads in the market, shunting Yahoo further down the ranks. Even in 2010, Yahoo could claim only 3 percent of the search market in Korea.

In September last year, Yahoo appointed Lee Kyung-han, a former Samsung executive, as CEO. We’re still trying to determine how many employees Yahoo Korea has and will update this post accordingly.

Full memo:

Dear Yahoos,

Today we communicated to our colleagues in Korea that we plan to close Yahoo!’s Korean business at the end of this year. Since 1997, our team in Korea has provided high-quality editorial content and services, and has built a successful search advertising network. We’re proud of the work they’ve done. Despite the hard work of the team, the Korean operation has faced serious and growing challenges over the past few years that now make scaling our business very difficult. Ultimately, today’s announcement is part of our effort to focus our resources on building a financially strong, global business that’s set up for long-term growth and success.

Yahoo! is committed to Asia. We have a solid business there and see a lot of opportunity across our content properties, communications services and ecommerce sites. We’re working to build great experiences for the millions of people across the region who come to Yahoo! every day.

Please join me in thanking our colleagues in Korea for their hard work and dedication throughout the years. We truly appreciate your support for the team through these difficult time.

Sincerely,

Rose