SK Hynix announces $75B investment to boost AI chipmaking business – SiliconANGLE News
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SK Group, the parent of South Korean memory chipmaker SK Hynix Inc., said today it’s planning to invest $74.6 billion into its chip business over the next three years, while setting aside an additional $58 billion especially for artificial intelligence-related technologies and shareholder returns.
The new investment is apparently in addition to the $90 billion that the conglomerate had already set aside to build a new “mega fab complex” that is currently under construction in the city of Gyeonggi.
The $58 billion investment will be used to build out SK Hynix’s AI semiconductor manufacturing capabilities, so that it can “improve its competitiveness by focusing on its AI value chain,” Reuters reported. In addition, part of that money will also go toward funding shareholder returns and streamlining the operations of SK Group’s 175 subsidiaries.
The announcement followed a two-day strategy session involving top executives from SK Group and also officials from a number of affiliated organizations. One source, who was familiar with the talks at the meeting, told Reuters that SK Group is considering various options, including mergers and divestments of some of its affiliated companies.
A spokesperson for SK Group told Reuters that the changes discussed during the session are part of the conglomerate’s “routine management activity,” aimed at helping the company pivot in response to a “changing business environment.”
In a later statement issued to the press, SK Group Chairman Chey Tae-won said that “pre-emptive and fundamental change is necessary” for the company to remain competitive. “In the U.S., the wind of AI-related change is so strong that there’s nothing to talk about except that,” he added.
The announcement comes after SK Hynix delivered its first loss in 10 years in fiscal 2022, losing almost $3 billion. However, the company has since recovered, thanks in part to an AI boom that has been good to memory chipmakers. SK Hynix is, along with the U.S. chipmaker Micron Technologies Inc., one of just a handful of companies in the world that’s able to design and build the high-bandwidth dynamic random-access memory chips needed to power advanced AI workloads. Whereas Nvidia Corp.’s graphics processing units provide the processing power for AI systems, DRAM chips are just as vital, providing the memory and storage capacity those workloads need.
Earlier this year, SK Hynix announced its first PCIe 5.0 solid-state drive for AI applications, and is also working on a 300-terabyte SSD that’s designed to handle both data center and on-device AI workloads.
Chey Chang-won, chairman of SK Group’s Supex Council, later told reporters that the company intends to use the funds set aside to enhance its AI value chain and “attain global competitiveness through new investments in AI and semiconductors.” Besides advancing the development of its high-bandwidth memory chips, it will also invest in new data centers and AI services such as personal AI assistants.
Meanwhile, SK Group subsidiaries including the mobile carrier SK Telecom and the internet connectivity provider SK Broadband will jointly invest $2.46 billion over the next five years in the AI data center business.
South Korea’s government recently announced a $19 billion support package to build out its local semiconductor industry, enticing both SK Hynix and its rival memory chipmaker Samsung Electronics Co. Ltd. to invest further in the sector.
That investment comes in the wake of the U.S. government’s decision to pour billions of dollars into its own chipmaking infrastructure. Similarly, China and the European Union have also announced megabucks investments in the semiconductor industry.
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