SK Group, a South Korean conglomerate, plans to invest $75 billion in AI chips

SK Hynix Inc., a subsidiary of South Korea's SK Group, has announced plans to invest $74.6 billion by 2028 to strengthen its foothold in the AI sector. As the world's second-largest memory chip maker, supplying giants like Samsung and Nvidia, SK Hynix aims to capitalize on the growing demand for AI technologies to drive its future growth. According to Reuters, a significant portion—around 80%—of this investment will be directed towards expanding production of high-bandwidth chips essential for Nvidia's AI accelerators. Additionally, SK Telecom and SK Broadband will contribute to the initiative by launching data center operations under the SK Group umbrella.

During a recent meeting of top executives and affiliates on June 28-29, SK Group Chairman Chey Tae-won emphasized the necessity for the conglomerate to proactively adapt to the evolving landscape of the AI industry. He stressed the importance of enhancing SK Group's leadership in the AI value chain to meet the increasing demands, particularly in the dynamic US market. This strategic investment underscores SK Group's commitment to leveraging AI technology as a cornerstone of its future growth strategy.

SK Group targets higher profitability

Following discussions on gradually reducing the number of subsidiaries within the group to a more manageable level, SK Group is considering potential mergers or sales, although details on the extent of these streamlining efforts were not disclosed. According to Reuters, SK Innovation, which owns South Korea’s largest oil refinery, may merge with profitable gas enterprise SK E&S.

After concluding a marathon 20-hour summit over two days, company representatives aim to generate 80 trillion won by 2026 through significant operational changes. One objective is to achieve 30 trillion won in free cash flow over the next three years to maintain a debt-to-equity ratio below 100%.

SK Group's target is to achieve a pre-tax profit of 40 trillion won by 2026, following a loss of 10 trillion won last year. The company is on track to achieve the first milestone of this recovery, expecting to report a pre-tax profit of 22 trillion won this year.