SK Hynix Considers U.S. AI Entity... Concerns Over 'Split-Off Listing' as SK Group Consolidates Prime Assets

Review of Establishing a U.S. AI Investment Entity and Transferring Assets
Key Assets Like TerraPower to Be Consolidated, Raising Expectations for Potential Listing

As news emerged that SK Hynix is considering establishing a corporation in the United States to oversee SK Group's artificial intelligence (AI) investments, the industry is paying close attention. This move is interpreted as an effort to consolidate AI investment capabilities, which have been scattered across various affiliates, and to reorganize the AI ecosystem around SK Hynix, the group's core cash cow. Within the industry, there is a mix of expectations for SK Group to take a leading position in the global AI market and concerns about the potential dilution of shareholder value due to possible dual listings.

According to business circles on January 28, SK Hynix is expected to soon hold a board meeting to discuss the establishment of an overseas corporation dedicated to managing the group's AI investments. There is speculation that the new entity may take over approximately 10 trillion won worth of overseas AI investment assets currently held by group affiliates. At present, SK and SK Innovation hold stakes in TerraPower, an American small modular reactor (SMR) company, while SK Telecom owns shares in American generative AI companies Perplexity and Anthropic.

This move by SK Hynix is seen as a proactive strategy to respond to the rapidly changing AI industry landscape. With the explosive growth of the generative AI market and the expansion of AI data centers, demand for high-performance AI semiconductors such as high-bandwidth memory (HBM) is soaring. Establishing an AI investment corporation in the United States would enable swift investment in promising overseas AI technologies and startups, thereby enhancing the group's overall AI competitiveness and providing a strategic foothold for expanding technological cooperation within the U.S. AI ecosystem.

However, there are also significant concerns. If the AI investment entity to be established in the United States takes charge of the group's core AI investments and business, and later goes public independently on the U.S. stock market, it could result in the dilution of existing SK Hynix shareholders' equity. This issue is closely related to the so-called "split-off listing" controversy, where domestic companies spin off key business units and list them separately, potentially running counter to the Yoon Suk-yeol administration's efforts to address the "Korea Discount" (the undervaluation of Korean stocks).

Namwoo Lee, Chairman of the Korea Corporate Governance Forum, stated, "It is not normal from a governance perspective to have a holding company for AI under a manufacturing company engaged in the memory business. This is something that would not happen in the United States," adding, "We will have to see how the market evaluates this, but if the new U.S. entity is listed locally, it could be considered a dual listing."

An industry insider commented, "Coupang, despite being a Korean company, is listed in the United States and receives support from American politicians when there are frictions with our government, effectively being treated like a U.S. company. SK Hynix may have taken note of this. In Korea, regulations on holding companies are strict, while in the U.S., tariffs are used to pressure local semiconductor investment. Establishing a U.S. corporation could also be a strategic move to use it as leverage in future tariff exemption negotiations."

Some analysts suggest that while the establishment of a dedicated U.S. investment entity by SK Hynix may cause some short-term confusion, it could be positive in the long run by simplifying the governance structure and improving asset efficiency. Consolidating assets scattered across affiliates is seen as a process to resolve uncertainties related to the holding company and to enhance the efficiency of asset management.

A securities firm official stated, "The new entity to be established in the United States is more likely to serve as a strategic investment control tower, investing in and managing stakes in promising global AI companies, rather than directly engaging in manufacturing or service provision as a 'business company.' Such special purpose companies (SPCs) for investment purposes are usually not subject to listing and are likely to remain as subsidiary organizations supporting the corporate value of SK Group."

SK Hynix commented, "We are reviewing various options, including the establishment of a corporation for AI investment," adding, "Once a decision is made, or within one month, we will make an official disclosure."