[Biz View] "Promised to Spend 60 Trillion Won in the US"... Will SK's Investment in China Be Affected?

Chairman Chey Tae-won’s Three Visits to the US... "52 Billion USD Investment Over 10 Years"
Possibility Raised of SK Hynix's Advanced Equipment Introduction in China Being Canceled
Battery and Energy Sectors Expanding New Industries in China One After Another
Hard to Justify Opposition to US Green Energy Projects

Chairman Chey Tae-won of SK Group (left) is greeting Wang Yong, Chinese State Councilor (second from right), and other Chinese officials including Zhu Guohong, then Chinese Ambassador to Korea, at a breakfast meeting during the 2018 Boao Forum Seoul Conference. The Boao Forum is known as the "Asian Davos Forum." Photo by Yoon Dong-ju doso7@

[Asia Economy Reporter Choi Dae-yeol] Chey Tae-won, chairman of SK Group, has visited the United States three times this year alone. During his visit in May leading the Korea-US Economic Delegation, President Joe Biden personally praised Chairman Chey and other CEOs of Korean companies at a Korea-US summit press conference. It was a gesture of gratitude for deciding on large-scale investments in the U.S. Later, in July, he visited the U.S. again with representatives from some affiliates to directly inspect local business operations.

From late last month to early this month, he traveled to the U.S. alone without accompanying affiliate CEOs. He met with local political and business figures, including Mitch McConnell, the top-ranking Republican senator, to discuss SK’s overall business in the U.S. At meetings with leaders from both major U.S. political parties, Chairman Chey revealed the group’s large-scale investment plans. SK plans to invest $52 billion (approximately 62 trillion KRW) in the U.S. over the next decade, with about half of that amount allocated to eco-friendly sectors such as batteries and hydrogen. This move reflects consideration of the active efforts by the U.S. government and Congress to address climate change and carbon neutrality.

Chairman Chey Tae-won of SK Group (right) is meeting with Mitch McConnell, Republican Senate Majority Leader, at the United States Capitol in Washington, DC on the 27th of last month.

Less than a month after Chairman Chey’s visit to the U.S., foreign media reported that the U.S. government might block SK’s business operations in China. The report, citing a White House official, suggested that SK Hynix’s plan to introduce advanced equipment to its semiconductor factory in China could be thwarted by U.S. opposition. Considering that the U.S. government has long maintained a stance of blocking the export of such equipment (extreme ultraviolet lithography equipment) to China, this news was not entirely surprising. Moreover, there is still considerable time before SK Hynix needs to replace equipment at its Chinese factory.

Nevertheless, concerns have been raised that SK could suffer from the technological hegemony competition between the U.S. and China, especially in advanced industries like semiconductors. The U.S. government is unlikely to change its position, and SK cannot easily adjust its tightly integrated global semiconductor production network in the short term. The intensifying global competition over semiconductor processes, which is now a race against time, also poses a burden for SK.

For SK, which centers its business on energy & petrochemicals and semiconductors & information and communication technology (ICT), China is as important as the U.S. Existing semiconductor and petrochemical businesses have a significant presence in local Chinese operations, and the company is exploring various Chinese ventures including electric vehicle batteries, hydrogen, new energy, and plastic recycling as next-generation growth engines. This is part of an active localization strategy (insider approach).

Choi Tae-won, Chairman of SK Group, is delivering the opening speech at the Nanjing Forum held in 2019 at Nanjing University, Jiangsu Province, China. Jiangsu Province is where SK's first battery factory in China is located, and Chairman Choi has been recognized as an honorary citizen for his contributions to the region's economic development.

Among the three domestic battery companies, SK is the most active in local investment in China. Its 1st to 3rd factories began mass production consecutively last year and earlier this year. Its local production capacity in China is 27 GWh annually, surpassing LG Energy Solution (20 GWh, industry estimates) and Samsung SDI (3 GWh). Additionally, SK has decided to invest further in a new factory in Yancheng, planning to pour in 3 trillion KRW. By 2025, it aims to expand its production capacity in China to 75 GWh, which accounts for one-third of its global operations. Besides expanding scale, SK has also secured battery supply contracts with local Chinese electric vehicle manufacturers, which is unusual for a Korean company.

Furthermore, SK is pursuing entry into the East Asian market together with U.S.-based Plug Power, which possesses water electrolysis and fuel cell technologies, with China likely to be the first target country. SK plans to promote energy solution businesses in cooperation with Chinese power companies. Energy solutions cover the entire spectrum of power generation and distribution services and are gaining attention as the share of renewable energy increases. SK is also prioritizing China for its overseas ventures in recycling waste plastics and batteries.

At present, it is difficult to predict whether the U.S.-China rivalry for hegemony will spread beyond advanced sectors like semiconductors to the entire industry. It is not necessarily fortunate if the conflict does not escalate. From a business management perspective, the ongoing uncertainty is the most undesirable situation to face. One fortunate aspect is that most of SK’s recently pursued new businesses align with eco-friendly and carbon-neutral initiatives, making it difficult for any government to justify blocking them.

This content was produced with the assistance of AI translation services.