"Hyungkeun Kim's" Semiconductor and AI Transformation... SK Ecoplant's High-Tech Sales Share Surpasses 40%

Last Year, High-Tech Business Accounted for 12.54% of Sales
"After Incorporating Four Companies, Annual High-Tech Sales to Exceed 3 Trillion Won"

The proportion of sales from SK Ecoplant's high-tech business has surpassed 40%. This achievement comes just one year after Hyungkeun Kim, President of SK Ecoplant, began driving a stronger focus on the semiconductor and artificial intelligence (AI) sectors. If SK Ecoplant successfully transforms its business structure through its strategy of pivoting to semiconductor and AI businesses, the company is expected to secure new growth engines.

According to the Financial Supervisory Service's electronic disclosure system on July 15, the high-tech business division accounted for 43.98% of SK Ecoplant's total sales (2.6105 trillion won) in the first quarter of this year, with 1.1482 trillion won in sales. The high-tech business division, established in October last year, is responsible for constructing semiconductor manufacturing facilities, manufacturing and selling industrial gases, and selling memory semiconductors. The division's sales share surged less than a year after its launch. At the end of last year, its share was only 12.54%. Over just three months, the sales proportion increased by 31.44 percentage points. In the first quarter of last year, the proportion was only 4.69%.

This change followed the appointment of President Kim in July last year. He shared a strategy to drive a new leap forward through a "great transformation" centered on semiconductors and AI. Upon his appointment, President Kim sent a message to SK Ecoplant employees emphasizing that he would achieve results in semiconductor-related businesses, build infrastructure aligned with SK Group's focus on the AI era and investments in the environmental sector, and respond to these new trends. The decision to separate the high-tech business division was also a measure to respond to growth in the semiconductor market and to strengthen competitiveness.

Hyungkeun Kim, President of SK Ecoplant. SK Ecoplant

This strengthening of the high-tech business has created synergy with the AI boom, leading to increased sales. The semiconductor manufacturing facility construction business is recognized for its competitiveness, and the industrial gas business has secured large-scale customers such as SK Hynix and SK Energy. As a result, service sales within the high-tech business division in the first quarter of this year reached 644.8 billion won, a 589% increase compared to the previous quarter.

Due to the focus on semiconductor and AI businesses, the sales proportion of the solutions business, which has become non-core, declined relatively. The solutions business covers plants, housing and construction, and infrastructure, and its share in the first quarter of this year was 33.32%. This represents a significant decrease compared to 57.43% at the end of last year and 72.79% in the first quarter of the same year.

The proportion of high-tech sales at SK Ecoplant is expected to increase further in the future. In May, the company decided to incorporate four SK Group subsidiaries related to semiconductor materials into its business portfolio to strengthen its semiconductor and AI-related operations. These subsidiaries under SK's company-in-company (CIC) SK Materials?SK Trichem, SK Resonac, SK Materials JNC, and SK Materials Performance?produce specialty gases and precision materials used throughout the semiconductor manufacturing process. The combined sales of these companies last year are estimated at around 350 billion won. The incorporation is expected to be completed within this year.

To strengthen its semiconductor business, SK Ecoplant is also accelerating the rebalancing of non-core businesses. The company is reviewing the sale of its environmental management subsidiaries, Renewus and Renewon. SK Oceanplant, a manufacturer related to offshore wind power in which SK Ecoplant holds a 37.6% stake, is also being considered for sale. Recently, SK Ecoplant disposed of 10 million common shares of its U.S. fuel cell partner Bloom Energy through a block deal outside regular trading hours. The sale amount is estimated at approximately 380 billion won.

The market assesses that the restructuring of SK Ecoplant's business structure around semiconductors will lead to improved profit generation. Strengthening the semiconductor-related business portfolio is expected to improve cash flow, and rebalancing through the sale of non-core businesses may help alleviate the financial burden that has increased due to large-scale investments. Jeon Jihoon, a research fellow at Korea Ratings, explained, "There is a potential for business restructuring in some businesses or subsidiaries with poor investment performance. The group is currently focusing its investments on AI-related semiconductor businesses, so growth centered on the high-tech division is expected for the time being." He added, "Once the incorporation of the four companies, including SK Trichem, is completed in December this year, annual sales from the high-tech division will exceed 3 trillion won, establishing it as SK Ecoplant's main profit-generating base."