SK Bets KRW 600 Trillion on Yongin Semiconductor Fab Alone... AI Infrastructure Speed Race

[Korea Financial Times, Gwak Horyung] SK is pouring KRW 600 trillion into the Yongin semiconductor cluster—five times its original plan—going all-in to secure artificial intelligence (AI) infrastructure. The government also plans to facilitate external funding through regulatory easing. While some raise concerns about preferential treatment for a specific company, SK is pushing forward, emphasizing that building a national AI ecosystem is an urgent task.

The government is pursuing a plan to ease the mandatory equity ratio for great-grandchild companies of grandchild companies in the semiconductor sector from 100% to 50% or more through special provisions under the National Advanced Strategic Industries Act. The final plan is scheduled to be confirmed by the National Assembly.

SK Hynix stands out as a company that will benefit from this policy. As a grandchild company of SK Group's holding company, SK Hynix will be able to establish a special purpose company (SPC) and attract external investment through regulatory easing. This will significantly reduce the initial investment costs for semiconductor factory construction. The existing method of expanding borrowing raises concerns about financial risks, while paid-in capital increases carry the possibility of declining controlling shareholder equity ratios. Notably, the National Growth Fund, which will launch next year with participation from the government, financial institutions, and the general public, plans to participate as an external investor.

SK Hynix currently has abundant cash thanks to the recent semiconductor boom. As of the end of the third quarter, cash and cash equivalents (including short-term financial instruments) stood at KRW 27.854 trillion, a 2.6-fold surge from KRW 10.858 trillion a year earlier. However, the company maintains that its own cash alone is insufficient for the investment amount that must be injected immediately to gain an edge in the global AI speed race.

Chey Tae-won, Chairman of SK Group, met with President Lee Jae-myung in mid-last month and stated, "KRW 600 trillion in investment in the Yongin semiconductor fab alone will continue going forward." This represents a five-fold increase from the KRW 120 trillion projected investment announced in 2019. In mid-this month, Kwak Noh-jung, CEO of SK Hynix, also told President Lee, "If we wait to earn money before investing, we'll miss the timing." President Lee responded, "We discussed the funding investment issue I talked about with Chairman Chey," adding, "It makes sense."

As regulatory easing subsequently gained momentum, some political circles and civic groups raised claims that "Isn't this customized preferential treatment for SK?"

In response, SK Hynix posted fact-check materials on its website and YouTube, stating, "This is a fundamental question of how to make advanced industry investment sustainable in a rapidly changing environment," and "It's not about a specific company or individual case." Regarding criticisms about undermining the principle of separation between financial and industrial capital, the company countered, "This is a temporary structure for investing in large-scale production facilities like semiconductor factories," and "It is completely different in nature from means to expand business areas or change governance structures."

At the SK Group level, the company is actively emphasizing that AI infrastructure investment is core to national competitiveness. SK is the entity that has announced the most concrete domestic AI ecosystem cooperation plan for AI business through Blackwell GPUs supplied by NVIDIA. SK plans to build the country's largest 'AI Factory' equipped with over 50,000 NVIDIA GPUs by the end of 2027 and provide a GPU-as-a-service model. This will be provided not only to SK affiliates but also to developers participating in the government-led sovereign AI project.

Gwak Horyung (horr@fntimes.com)