From Burden to Growth Engine... SK Hynix's Major Transformation, Choi Tae-won's Decisive Move Pays Off

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[Asia Economy Reporters Sunmi Park and Jinho Kim] On the 14th, SK Hynix will mark its 10th anniversary of joining the SK Group. The company, which carried the stigma of a failing business with an operating loss of 227.3 billion KRW ten years ago, has now become a key profitable affiliate responsible for nearly 30% of the group’s revenue and a core growth engine for the future. This success highlights the decisiveness and bold investment of SK Group Chairman Chey Tae-won, who foresaw the growth potential of the semiconductor market and acquired a loss-making company. Chairman Chey plans to aggressively expand SK’s global footprint by further developing semiconductors centered on SK Hynix, as well as the battery and bio sectors.

◆ Chey Tae-won’s Winning Move... SK Hynix Transforms into a Growth Engine for the Group = The industry’s assessment of SK Hynix’s transformation over the 10 years since joining the SK Group is one of remarkable progress. Last year, SK Hynix’s sales exceeded the performance during the semiconductor super boom in 2018, reaching 43 trillion KRW. With the full effect of this year’s acquisition of Intel’s NAND business, sales could potentially reach 60 trillion KRW.

At the time of joining the group in 2012, the company recorded a loss of 227.3 billion KRW, but last year operating profit soared by 147.6% to 12.4103 trillion KRW. The market capitalization, which was 16 trillion KRW at the time of acquisition, has now surpassed 90 trillion KRW and is approaching the 100 trillion KRW mark.

Chairman Chey’s contribution to SK Hynix’s remarkable transformation is significant. Although there was internal opposition within the group at the time of acquisition, citing it as an overly ambitious M&A, Chairman Chey pushed forward with the acquisition, anticipating semiconductor growth. Recognizing that growth requires initial investment, he made bold investments in SK Hynix from the start. In 2012, he decided on a generous investment of 3.9 trillion KRW, and by 2017, facility investments exceeded 10 trillion KRW.

Those who led the acquisition continue to lead the company today, guiding it into a stable growth phase. Vice Chairman Park Jung-ho, Presidents Lee Seok-hee and Noh Jong-won oversee overall business and investments, while Vice Chairman Park Sung-wook, who has dedicated over 30 years to memory semiconductors since the days of Hyundai Electronics Industry (the predecessor of Hynix) in 1984, serves as a technology advisor reviewing future growth engines.

In 2017, SK Hynix made a 4 trillion KRW equity investment in Kioxia (formerly Toshiba Memory), a NAND specialist company, and in 2020, it signed a contract to acquire Intel’s NAND business for 10.3 trillion KRW, taking a step forward as a global leader in the memory sector. Shortly after the Chinese government approved the Intel NAND business acquisition, SK Hynix established its subsidiary Solidigm to strengthen independent management of the Intel NAND business. In San Jose, USA, SK has established Sapion, an AI semiconductor design company, and Gauss Labs, an AI solution development specialist, and is also pushing forward with the construction of an R&D center to lead semiconductor research and development with an investment of 1.2 trillion KRW, among various other business initiatives.

◆ SK Group Approaching 200 Trillion KRW in Sales... Future Growth Engines ‘BBC’ = Thanks to the strong performance of key affiliates including SK Hynix, SK Group is on the verge of surpassing its mid- to long-term goal of 200 trillion KRW in sales. In particular, the battery (B), bio (B), and semiconductor (C) sectors?collectively known as ‘BBC’?which Chairman Chey has focused on, have established themselves as the group’s core growth engines, raising expectations for the future. SK, which grew as a domestic company in sectors like refining, is now recognized as a company reborn with a global market foundation.

SK is in a position to join the 200 trillion KRW sales club last year, following Samsung and Hyundai Motor. Major mergers and acquisitions (M&A), including the successful acquisition of SK Hynix, played a significant role in this growth. Currently, the group has 21 listed affiliates.

SK is pursuing a new business strategy to expand its global footprint by focusing on ‘BBC’ as its core growth engines. Of the 48 trillion KRW invested in the global market over five years since 2017, about 80%, or 38 trillion KRW, was invested in the ‘BBC’ sectors. Battery investments accounted for the largest share at 19 trillion KRW, followed by semiconductors (17 trillion KRW) and bio (2 trillion KRW).

The large-scale focused investment in BBC by SK Group reflects Chairman Chey’s strong will. To survive the increasingly fierce global business environment, Chairman Chey called for a ‘deep change’ in 2017. The business community regards this directive as the turning point that transformed SK Group from a domestic industry player into a global market-based ‘BBC’ company.

Chairman Chey plans to contribute to enhancing national competitiveness through the group’s future growth engines, ‘BBC.’ Over the past five years, SK Group has actively pursued the development of ‘BBC’ as the next-generation growth engines for South Korea.

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