Mentioned at Group CEO Seminar Closing Remarks
"Not Just Simple Cost Reduction... Must Secure Fundamental Competitiveness"
"Entrepreneurship and Communication Should Be Valued"
Choi Tae-won, Chairman of SK Group, predicted that a massive expansion era of the artificial intelligence (AI) market will arrive around 2027, emphasizing the need to hasten the completion of operational improvement (O/I).
In his closing remarks at the '2024 CEO Seminar' held on the 2nd at the SKMS Research Institute in Icheon, Gyeonggi Province, Chairman Choi said, "There is a high possibility that the AI market will undergo massive expansion around 2027 with the emergence of next-generation ChatGPT. To seize growth opportunities without missing that timing, SK must expedite the completion of the ongoing 'operational improvement' (O/I)."
Choi Tae-won, Chairman of SK Group, is delivering the closing speech at the '2024 SK Group CEO Seminar' held on the 2nd at the SKMS Research Institute in Icheon, Gyeonggi Province. (Photo by SK Supex Council)
He explained, "'Operational improvement' does not simply mean cost reduction and efficiency enhancement, but is a process of securing fundamental competitiveness," adding, "For this, it is important to value 'entrepreneurial spirit' and 'communication with stakeholders,' which are core management elements that are invisible and unmeasurable but not reflected in financial statements."
He also stated, "To advance 'operational improvement,' it is necessary to utilize AI effectively," suggesting that younger members and leaders who use AI daily propose operational improvement plans incorporating AI, improve company policies and systems accordingly, and provide rewards commensurate with the achievements.
Regarding the direction of the AI business, Chairman Choi said, "SK should leverage its technological capabilities and cooperation among group affiliates and external partners to build the most cost-effective and excellent AI data centers (DCs) and expand the group’s AI business on a global scale." He mentioned key future tasks including ▲strengthening AI chip competitiveness such as semiconductor design and packaging ▲creating AI demand based on customer needs ▲accelerating the 'energy solution' business to prepare for a surge in power demand.
To the CEOs, he urged the establishment of market forecasting and performance measurement systems. He said, "To avoid repeating past mistakes, it is necessary to closely observe macro environment changes and build business environment forecasting systems tailored to each company’s characteristics," adding, "It is also necessary to quantify and measure the achievement level of 'operational improvement.'"
The CEOs attending the seminar reported that results such as financial structure stabilization have begun to appear through 'Operational Improvement 1.0' activities like maximizing free cash flow (FCF), and resolved to strengthen fundamental business competitiveness through 'Operational Improvement 2.0,' which enhances operational capabilities in manufacturing, marketing, and more. They also agreed on the direction to evolve into 'Operational Improvement 3.0,' focusing on technological capabilities that respond to market and customer demand changes after 'Operational Improvement 2.0.'
A session was also held to introduce factors that enabled SK Hynix to overcome the crisis of recording a massive operating loss close to 8 trillion won last year and leap forward as a market-leading company by posting a record quarterly operating profit of 7 trillion won in the third quarter. SK Hynix CEO Kwak No-jung explained that, beyond technology and product competitiveness, bold decisions such as converting the Cheongju M15 NAND flash production base into an HBM production line, maximizing profitability through data-driven decision-making, and a corporate culture that freely expresses opinions based on the 'One Team Spirit' led to this turnaround opportunity.
Additionally, the executives shared the recognition that establishing global market penetration and export expansion strategies is necessary for SK and South Korea to achieve greater growth. They decided to concentrate export capabilities at the group level and strengthen synergy among businesses. In particular, they pledged to make special efforts to support the global competitiveness enhancement of not only SK affiliates but also small and medium-sized partner companies.
Choi Chang-won, Chairman of the SK Supex Council, evaluated, "The results of proactive rebalancing and operational improvement efforts have become visible since the second half of the year," and said, "If we endure the current difficult times well, opportunities for greater challenges and leaps in the future will open."
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