SK Hynix Intensifies Investment in AI Race

SK Group announced that its semIConductor subsidiary, SK Hynix Inc., plans to invest 103 trillion Korean won (equivalent to US$74.8 billion) by 2028, underscoring the group's commitment to the semiconductor industry, which it deems crucial for the future growth of its business.

In a statement released last Sunday, SK Group revealed that approximately 80%, or 82 trillion Korean won, of this investment will go towards high-bandwidth memory (HBM) chips. SK Hynix's HBM chips are optimized for use with NVIDIA's AI accelerators. As part of its AI bet, SK Telecom and SK Broadband will invest 3.4 trillion Korean won in data center operations.

Prior to this announcement, SK Group Chairman Chey Tae-won and around 20 executives held an annual strategic meeting to discuss the direction of the second-largest Korean conglomerate, trailing only behind Samsung. Over the past two days, executives engaged in a 20-hour marathon discussion, debating ways to reform the group, which also operates in sectors such as energy, chemicals, and batteries.

This year is pivotal for both SK Group and Chey Tae-won due to a highly publicized divorce case. On May 30, the Seoul High Court ruled that Chey must transfer 1.38 trillion Korean won (around US$1 billion) in assets to his ex-wife, Roh Soo-yeong, the daughter of former South Korean President Roh Tae-woo, and pay an additional 2 billion Korean won in alimony, marking the country's most expensive divorce settlement to date.

Given this backdrop, SK Group executives decided at their latest meeting to generate a target revenue of 80 trillion Korean won by 2026 through operational and business reforms. The goals also include securing 30 trillion Korean won in free cash flow within three years and maintaining a debt ratio below 100%.

According to the statement, the group incurred a loss of 10 trillion Korean won last year but expects to achieve a pre-tax profit of 22 trillion Korean won this year. It aims to rAISe this pre-tax profit to 40 trillion Korean won by 2026.

While this is the first time SK has disclosed its investment plans up to 2028, SK Hynix has already announced a series of investments this year, including a US$3.87 billion project to build an advanced packaging factory and an AI product research center in Indiana.

Domestically, SK Hynix will also invest US$14.6 billion in constructing a new memory chip complex and pursuing other domestic investments, including those in the Yongin semiconductor cluster.