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SK Hynix Inc. Plans $74.8 Billion Investment in Semiconductor Expansion

SK Hynix Inc., the semiconductor arm of South Korea’s SK Group, has unveiled ambitious plans to invest 103 billion won ($74.8 billion) by 2028. This strategic initiative aims to bolster the group’s presence in a critical sector poised for substantial growth in the coming years.

Investment Focus and Strategy

The majority of SK Hynix’s investment, approximately 82 billion won, will be allocated to the development of high-bandwidth memory (HBM) chips. These chips are specifically optimized for use in Nvidia Corp.’s artificial intelligence (AI) accelerators, reflecting SK Hynix’s strategic alignment with advancements in AI technology.

SK Telecom Co. and SK Broadband Co., subsidiaries of SK Group, are also slated to make significant investments in their respective sectors. SK Telecom plans to launch a 10-year bond, while SK Broadband will invest 3.4 billion won in expanding its data center business. These moves underscore SK Group’s broader commitment to fortifying its technological infrastructure and market position.

Strategic Meetings and Leadership Direction

The investment plan follows strategic meetings led by SK Group chairman Chey Tae-Won, who convened with approximately 20 executives to chart the future course of South Korea’s second-largest conglomerate. The discussions, which spanned intense debates over 20 hours, focused on optimizing operations across SK Group’s diverse portfolio, including energy, chemicals, and batteries.

Financial Goals and Performance Targets

In response to both internal and external pressures, including a significant divorce settlement for Chey Tae-Won, SK Group aims to achieve several financial milestones by 2026. Key objectives include generating 80 billion won from operational enhancements and securing 30 trillion won in free cash flow over three years to maintain a healthy debt-to-equity ratio.

Despite posting a 10 billion won loss last year, SK Group projects a pre-tax profit of 22 billion won for the current fiscal year, with plans to increase this figure to 40 trillion won by 2026. This ambitious growth trajectory underscores SK Group’s determination to rebound from recent financial challenges and position itself as a leader in the global semiconductor market.

Expansion Initiatives and Global Footprint

In addition to domestic investments, SK Hynix announced earlier this year a $3.87 billion investment to establish a state-of-the-art facility for packaging and a research center for AI products in Indiana, USA. Domestically, the company is investing $14.6 billion to construct a new memory chip complex and advance projects like the Yongin Semiconductor Cluster, reinforcing South Korea’s position as a hub for semiconductor innovation.

SK Hynix’s extensive investment plan underscores its commitment to expanding its semiconductor capabilities and solidifying its foothold in key markets worldwide. With a strategic focus on AI and high-bandwidth memory solutions, SK Group aims to not only enhance its technological offerings but also drive significant economic growth and innovation in the semiconductor industry.

As SK Group navigates through strategic investments and financial goals, the coming years will be pivotal in determining its trajectory and competitiveness in the global semiconductor landscape.

Conclusion:

SK Hynix’s bold investment of $75 billion underscores its commitment to transformational advances in AI technology.

SK Hynix is ​​poised to shape the future of AI innovation, setting new benchmarks in the semiconductor industry and beyond