SK Hynix announces $75 billion investment to strengthen AI chip manufacturing business

SK Group, the parent company of South Korean semiconductor memory maker SK Hynix, said today that it plans to invest $74.6 billion in its semiconductor business over the next three years, with an additional $58 billion set aside for artificial intelligence-related technologies and shareholder returns.

The new investment is likely to come on top of the $90 billion the conglomerate has already set aside for the construction of a new “mega-fab complex” currently under construction in Gyeonggi Province.

According to Reuters, the $58 billion investment will be used to build SK Hynix’s AI semiconductor manufacturing capabilities, “enhancing its competitiveness by focusing on the AI ​​value chain.” Additionally, part of the funds will be used to return profits to shareholders and improve the operational efficiency of SK Group’s 175 subsidiaries.

The announcement came after a two-day strategy meeting attended by top SK Group executives and executives from affiliated units. A source familiar with the discussions at the meeting told Reuters the group is considering various options, including merging or selling affiliates.

An SK Group spokesman told Reuters the reforms discussed during the meeting were part of the group’s “day-to-day management activities” and aimed at helping the company pivot in response to the “changing business environment.”

SK Group Chairman Chey Tae-won later told reporters in a statement that the company “needs preemptive and fundamental change” to stay competitive. “The winds of change related to AI are so strong in the U.S. that that’s all we can talk about,” he added.

The announcement came after SK Hynix posted its first loss in a decade in fiscal 2022, losing around $3 billion. But the company has since recovered, thanks in part to an AI boom that has been a tailwind for memory chip makers. SK Hynix, along with US chipmaker Micron Technologies, is one of the few companies in the world that can design and manufacture the high-bandwidth dynamic random-access memory chips needed to power advanced AI workloads. While Nvidia’s graphics processing units provide the processing power for AI systems, its DRAM chips are just as important, providing the memory and storage capacity those workloads need.

SK Hynix announced the first PCIe 5.0 solid-state drive for AI applications earlier this year, and is also working on a 300-terabyte SSD designed to handle both data center and on-device AI workloads.

SK Group Supex Council Chairman Choi Chang-won told reporters later that the company plans to use the funds to strengthen its AI value chain and “gain global competitiveness through new investments in AI and semiconductors.” In addition to developing high-bandwidth memory chips, it also plans to invest in new data centers and AI services such as personal AI assistants.

Meanwhile, SK Group subsidiaries including mobile phone operator SK Telecom and internet connection provider SK Broadband plan to jointly invest $2.46 billion in the AI ​​data center business over the next five years.

South Korea’s government recently announced a $19 billion package to develop the country’s semiconductor industry, encouraging both SK Hynix and rival memory chip maker Samsung Electronics to invest more in the sector.

The investment comes as the US government decides to pump billions of dollars into the country’s semiconductor manufacturing infrastructure. Similarly, China and the European Union have also announced huge investments in the semiconductor industry.

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