SK hynix Announces $74.6 Billion Investment to Strengthen Memory and AI Technologies

SK hynix Announces $74.6 Billion Investment to Strengthen Memory and AI Technologies
Image Credit: CNBC

SK hynix to Invest $74.6 Billion in Memory and AI Technology Expansion

Memory supplier SK hynix, holding 35% of the DRAM market, announced a significant investment of 103 trillion won (approximately $74.6 billion) over the next three years to bolster its position in the memory business while intensifying its focus on AI technologies. This investment is in addition to the $90 billion 'mega fab complex' currently being built in Gyeonggi Province.

Moreover, SK Group, the parent company of SK hynix, intends to allocate an extra $58 billion on top of its $75 billion budget. This funding will be directed towards enhancing AI and semiconductor capabilities to "improve its competitiveness by focusing on its AI value chain." Part of this investment will also support shareholder returns and streamline the operations of its 175 subsidiaries.

This strategic move follows a two-day strategy session involving top executives from SK Group and senior members of its affiliates. A source familiar with the matter mentioned that the conglomerate is exploring various options, including mergers and divestments, although specifics regarding which affiliates will be impacted remain undisclosed.

An SK Group spokesperson clarified that these changes are part of "routine management activity" to help the company navigate a "changing business environment, including geopolitical issues." SK Group Chairman Chey Tae-won emphasized the need for a “preemptive and fundamental change.”

SK hynix to Invest $74.6 Billion in Memory and AI Technology Expansion
Image credit: Wikipedia 

SK hynix faced its first loss in a decade in 2022, with operations losing nearly $3 billion. However, the recent AI boom has aided the company's recovery in the fourth quarter of 2023. This loss likely prompted senior management to pivot towards the AI sector, especially as memory production is a crucial revenue stream for the SK Group.

The company’s shift towards AI is logical, considering the substantial profits corporations like Nvidia are making in this field. SK hynix has already entered the AI market with its first PCIe 5.0 SSD and teased a 300 TB SSD aimed at data center and on-device AI applications.

These extensive investments from SK Group are expected to be well-received by Seoul, which recently introduced a $19 billion support package to bolster the local semiconductor industry. This move coincides with the U.S. and China significantly investing in their respective chip industries through initiatives like the CHIPS Act and Big Fund III. SK Group’s focus on AI technologies aims to deliver high-performance memory chips, benefiting its customers globally.