SK Hynix Vice Chairman: "Will Apply Again for Extension of China Equipment Export Restrictions... Need to Buy Time" (Comprehensive)

SK Hynix Holds 75th Annual General Meeting
Held at Headquarters in Icheon, Gyeonggi... Over 50 Shareholders Attended

Chairman Park Jung-ho, Vice Chairman of SK Hynix
"Many Market Rebound Factors... Expecting Synergy with Solidigm"

SK Hynix held its regular shareholders' meeting and detailed its business plans for this year. Park Jung-ho, Vice Chairman of SK Hynix, acknowledged that the business environment is challenging due to the worsening macroeconomic conditions but pledged to enhance technological competitiveness alongside optimizing production costs. While reorganizing the business to ensure technological superiority translates into results, he also added plans to focus on resolving geopolitical risks.

On the morning of the 29th, SK Hynix held its 75th regular shareholders' meeting at the SUPEX Center headquarters in Icheon, Gyeonggi Province. Key executives attended the meeting, including Park Jung-ho, President of SK Hynix and the chairperson of the meeting, Kwak No-jung, President of SK Hynix, Kim Dong-seop, President of SK Hynix, and Yoon Tae-hwa, Chairman of the Audit Committee of SK Hynix.

The shareholders' meeting was held under strict security. Identification was checked at the entrance of the business site, and to enter the meeting hall, shareholders had to attach security stickers to the front and back cameras of their smartphones. Photography was strictly prohibited. As the meeting start time of 10 a.m. approached, shareholders gradually arrived. About 50 shareholders in total filled the seats in the meeting hall. Despite the large gathering, the atmosphere was calm enough that conversations were barely audible.

SK Hynix Icheon Campus Main Gate / Photo by SK Hynix

During the approximately one-hour meeting, Vice Chairman Park reported on business operations and handled the approval of the financial statements for the 75th fiscal year, the appointment of outside directors, audit committee members, and other non-executive directors. The agenda also included increasing the director remuneration limit from 12 billion KRW to 20 billion KRW. He also disclosed the business responses and plans addressing the semiconductor market downturn that has continued since last year.

Vice Chairman Park explained, "Last year, the market conditions deteriorated much faster than expected, leading to a sharp contraction in consumer sentiment and a rapid decline in IT demand, including mobile devices. As of the end of last year, the memory market size shrank by 33% more than our forecast, continuing the contraction, which caused operating profits and stock prices to fall."

The market outlook for this year also appears bleak. Park said, "We expect the memory market size in the first half of this year to shrink by 17% compared to the second half of last year. The unresolved macroeconomic uncertainties persist in the first half, and IT demand continues to weaken." He added, "The business front is facing a very challenging management environment."

However, Vice Chairman Park expressed hope for a turnaround in the second half. On the demand side, the effects of China's reopening and the transition to the 5th generation Double Data Rate (DDR5) are anticipated. Increased demand for server products such as High Bandwidth Memory (HBM) due to the ChatGPT effect is also expected. On the supply side, supply chain adjustments due to production cuts in the memory industry and customer inventory depletion are anticipated.

Park Jung-ho, Vice Chairman and CEO of SK Hynix, is speaking at the 75th Annual General Meeting of Shareholders. /

Of course, macroeconomic uncertainties are not expected to disappear suddenly. To flexibly respond to such market conditions, SK Hynix plans to reduce this year's investment to about 50% of last year's CAPEX scale (19 trillion KRW). Operating expenses (OPEX), which have mostly increased by around 10%, will also be reviewed from scratch and reduced in scale. The goal is to strengthen cost competitiveness through efforts such as adjusting product mass production speed and optimizing capital expenditures (CAPEX).

Vice Chairman Park said, "As seen in the cases of HBM and DDR5, although we have technological superiority over competitors, there is room for improvement in translating this into superior business performance. Going forward, we plan to revisit our business model and maximize investment effects through reestablishing CAPEX discipline."

He particularly plans to systematically organize the investment roadmap for NAND flash products. Park explained, "In the case of NAND, CAPEX can account for up to 80% of sales, but some companies control it so that it does not exceed 50%. We intend to set up discipline in this area."

Regarding concerns about Solidigm, which has not yet generated synergy effects since its acquisition from Intel, the goal is to achieve business results this year. Park emphasized, "Solidigm is improving cost competitiveness through SK Hynix's back-end manufacturing capabilities. We expect synergy to appear this year, and the acquisition of Solidigm will help strengthen the company's competitiveness."

M16 exterior at SK Hynix Icheon Campus / Photo by SK Hynix

Regarding geopolitical risks arising from the semiconductor hegemony battle between the United States and China, SK Hynix is working to diversify the semiconductor value chain. Vice Chairman Park said, "Not only the U.S. and China but also other countries are actively introducing support policies to build semiconductor value chains. We are learning cases by visiting various countries."

Meanwhile, Vice Chairman Park recently traveled to the U.S. just before the shareholders' meeting to discuss business issues and plans with Solidigm and customers. After the meeting, he told reporters that although the application process for subsidies under the U.S. semiconductor support law is complicated, "We will consider applying." Regarding the extension of China's semiconductor equipment export regulation waiver, which expires in October, he explained, "It is advantageous to buy time until the Yongin cluster is established. We will apply for the waiver again next year (October this year)."

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