South Korea’s Second Largest Chipmaker to Invest $75B in AI by 2028

Following a March commitment to invest $90 billion in a chip fabrication facility near Seoul, SK Hynix, South Korea’s second-largest chipmaker after Samsung, has announced plans to invest $74.6 billion over the next three years to advance memory chip technologies geared towards artificial intelligence (AI).

Parent company SK Group aims to secure an additional $57.8 billion by 2026 to further support its AI initiatives, according to a Reuters report.

Strategic AI Investment

SK Group has faced significant losses recently, particularly through SK Hynix and its vehicle battery subsidiary. If the additional funding is obtained, the combined investments will approach $133 billion. For context, SK Hynix’s market capitalization stands at about $118 billion, according to Companies Market Cap as of this article’s publication.

SK Group views these substantial expenditures and the increased emphasis on AI technology development as a strategy to recover losses and strengthen the company’s financial future. This focus on AI will also help streamline operations, with plans to reduce the number of subsidiaries from the current count of over 175 to better align with the group’s targets and ambitions.

Intense AI Competition

The enterprise-level AI market is fiercely competitive, dominated by major tech companies like Google, Microsoft, and Nvidia. The semiconductor market, however, is more diverse. While Microsoft, Nvidia, and Apple vie for the title of the world’s most valuable company, the chipmaker market extends beyond Silicon Valley.

As more tech companies enter the AI field and big tech continues to innovate, the demand for chips, especially those capable of training AI systems, has surged, leading to a global shortage.

Projected Financial Growth

SK Group believes its current investment strategy will significantly boost its profits, projecting an increase from $16 billion in 2024 to nearly $30 billion by the end of 2025.