SK Hynix Inc., the semiconductor arm of South Korea’s SK Group, has unveiled an ambitious investment plan, announcing it will allocate 103 trillion won (approximately $74.8 billion) towards the chip sector by 2028. This substantial investment underscores SK Group’s strategic focus on the semiconductor industry, which is viewed as crucial for the conglomerate’s long-term sustainability and growth.
Focus on High-Bandwidth Memory Chips
Image Source: trendforce.com
A significant portion of the investment, about 80 percent or 82 trillion won, will be dedicated to high-bandwidth memory (HBM) chips, according to a statement released by SK Group on Sunday. These HBM chips are particularly optimized for use with Nvidia Corp.’s artificial intelligence accelerators, reflecting SK Hynix’s commitment to advancing AI technology. This move aligns with the broader industry trend of integrating AI capabilities into various technological applications, underscoring the critical role that memory chips play in supporting advanced computational tasks.
In addition to SK Hynix’s significant investment, SK Telecom Co. and SK Broadband Co. will also contribute 3.4 trillion won towards enhancing their data center businesses. This reflects SK Group’s broader strategy of bolstering its AI and data infrastructure to maintain a competitive edge in the rapidly evolving technology landscape.
Strategic Planning Amidst Challenges
This comprehensive investment plan follows a series of high-level strategy meetings led by SK Group Chairman Chey Tae-won. Over two days, Chey and approximately 20 top executives engaged in marathon discussions, totaling 20 hours, to chart the future course of South Korea’s second-largest conglomerate. The meetings emphasized the need for a thorough overhaul of the group’s diverse business operations, which span energy, chemicals, and batteries, in addition to semiconductors.
The stakes for SK Group are particularly high this year, as Chairman Chey faces the challenge of securing $1 billion for a divorce settlement. Speculators suggest that this financial pressure may drive Chey to implement measures aimed at boosting the conglomerate’s overall performance.
As part of its strategic goals, SK Group aims to generate 80 trillion won from operations and business restructuring by 2026. Additionally, the group plans to secure 30 trillion won in free cash flow over the next three years to maintain a debt-to-equity ratio below 100 percent. Despite recording a loss of 10 trillion won last year, SK Group projects a pretax profit of 22 trillion won for this year, with a target of increasing this figure to 40 trillion won by 2026.
This investment plan is the first time SK Group has disclosed its financial strategy through 2028. However, SK Hynix has already announced several significant investments this year, including $3.87 billion for constructing an advanced packaging plant and AI research center in Indiana, and $14.6 billion for a new memory chip complex in South Korea, among other domestic investments in the Yongin Semiconductor Cluster. These moves signal SK Hynix’s commitment to strengthening its position in the global semiconductor market and driving innovation in AI technology.
I am a law graduate from NLU Lucknow. I have a flair for creative writing and hence in my free time work as a freelance content writer.