Behind SK Hynix's Record Performance Was 'Choi Tae-won's Tenacity'

Acquisition of Hynix in 2012
Proactive Investment in HBM... First Development in 2013
Directly Overseeing AI

SK Hynix has achieved its highest quarterly performance since its founding, bringing renewed attention to the steadfast investments of SK Group Chairman Chey Tae-won. It is evaluated that the company, which had been posting annual losses in the 200 billion KRW range, was transformed into the current SK Hynix through continuous focused investment in artificial intelligence (AI) semiconductors.

According to the business community on the 24th, Chairman Chey acquired SK Hynix (formerly Hynix Semiconductor) in 2012 as one of the future growth industry investments.

Although semiconductors were a field that the late Chairman Chey Jong-hyun had attempted to enter by establishing SK Semiconductor but failed due to the second oil shock, Chairman Chey Tae-won started a semiconductor study group in Seoul in 2010 by inviting experts. Through this group, he reviewed the future of the semiconductor market and the practical benefits of acquiring SK Hynix.

Choi Tae-won, Chairman of SK Group. Photo by Jo Yong-jun jun21@

At that time, SK Hynix was under creditor management and posting annual losses in the 200 billion KRW range, but Chairman Chey, having confirmed the growth potential of the semiconductor industry, proceeded with the acquisition of SK Hynix at a cost of 3.4267 trillion KRW despite opposition from those around him.

From immediately after the acquisition, Chairman Chey made large-scale investments across all fields, including high-bandwidth memory (HBM). He invested trillions of KRW annually in research and development and built new factories, including M14, in 2015.

As a result, SK Hynix, which developed HBM for the first time in the world in 2013, has secured technological leadership in the rapidly growing HBM market driven by the recent expansion of the AI market and continues its soaring performance, establishing itself as a core affiliate of SK Group. Since being incorporated into SK, Hynix’s sales have increased about fourfold and operating profit about 34 times over the past 10 years.

Earlier, Kwak No-jung, President of SK Hynix, also explained at a press conference held at the headquarters in Icheon, Gyeonggi Province, in May this year, "From 2012, right after SK Hynix was incorporated into SK Group, the memory market conditions were very unfavorable, and most semiconductor companies reduced their investment scale by more than 10% compared to previous years. Nevertheless, SK Group decided to increase investment. The uncertain HBM market, whose timing of opening was unknown, was also included in the investment at that time."

He added, "Through Chairman Chey’s global networking, collaborative relationships with each customer and partner company were established, which played a decisive role in securing AI semiconductor leadership."

In fact, Chairman Chey has continued his active involvement in AI semiconductors this year as well. Starting with his first on-site management visit in January to SK Hynix’s headquarters at the Icheon campus to directly oversee semiconductor issues, he has been regularly and occasionally checking AI semiconductor business matters and discussing ways to strengthen future business competitiveness.

In April, he met Jensen Huang, CEO of Nvidia, at Nvidia’s headquarters in the United States to discuss building a global AI alliance, and in June, he visited Taiwan to discuss cooperation plans with Wei Zhejia, Chairman of TSMC. Also, from late June, he stayed in the U.S. for two weeks, holding a series of meetings with CEOs of major U.S. big tech companies such as OpenAI, Microsoft (MS), Amazon, and Intel to discuss ways to solidify SK’s AI and semiconductor partnerships.

Chairman Chey is scheduled to attend the SK CEO Seminar, held over three days starting on the 31st, to discuss ways to enhance each company’s competitiveness related to future growth engines such as AI, semiconductors, and energy solutions. Next month, he is expected to present coexistence methods and AI vision for creating a global AI value chain at the 'SK AI Summit,' the largest private AI forum in Korea, held in Seoul.

Meanwhile, SK Hynix recorded an operating profit of 7.03 trillion KRW in the third quarter of this year on a consolidated basis, surpassing the record of 6.4724 trillion KRW in the third quarter of 2018, during the semiconductor super boom, for the first time in six years. Sales also hit an all-time high of 17.5731 trillion KRW, up 93.8% compared to the same period last year.