SK Group Chairman Chey Tae-won smiles brightly as SK hynix’s American depositary receipts (ADRs) opened at $170, above the offering price of $149, during a press briefing with correspondents held at the Nasdaq MarketSite in Manhattan, New York, on the 10th (local time). New York — Yoon Kyung-hwan Correspondent
With SK hynix’s (000660.KS) American Depositary Receipts (ADRs) successfully listed on the Nasdaq market, SK Group Chairman Chey Tae-won said the company could consider a face-value split of its common shares listed on Korea’s KOSPI market. Chey signaled that he would aggressively expand production facilities, saying the phenomenon of artificial intelligence (AI) demand overwhelming memory chip supply does not appear likely to end in the short term.
Chey held a briefing with correspondents at the Nasdaq MarketSite in Manhattan, New York, on the 10th local time, and said regarding the possibility of a face-value split of the Korean-listed common shares, “If the chief financial officer (CFO) requests it, I will of course do it.” Chey said, “I don’t yet have knowledge in that area, so I haven’t looked into the topic,” but when SK hynix President Song Hyun-jong, who was present, said, “We can review it,” Chey agreed, saying, “Everything should be reviewed.”
In fact, according to a U.S. Securities and Exchange Commission (SEC) filing, one SK hynix ADR corresponds to one-tenth of a Korean common share. This means the ease of stock trading was applied differently in Korea and the United States. The demand for a stock split was also raised at SK hynix’s regular shareholders’ meeting in March. At the time, SK hynix CEO Kwak Noh-jung responded, “We must comprehensively examine not only the share price but also trading volume, investor composition, and market outlook,” and “We will carefully review it while closely watching the company’s growth and share price trends.”
Chey said, “In a perfect market, the U.S. ADR and the Korean stock price should be the same, but because market characteristics and people’s preferences differ somewhat, there may be times when they diverge,” but dismissed concerns, saying, “That phenomenon cannot last forever, and the U.S. ADR does not mean shrinking the Korean stock market or splitting the pie.”
Regarding the U.S. demand for investment, Chey kept his distance, saying, “We can review it, but our position is not that we will definitely do it.” Chey opened by saying, “The U.S. has not directly asked us to invest, but there has been a lot of related news, so whether there is an official request does not seem important,” and “Since the U.S. is pursuing reshoring (the return of overseas business sites to the home country) of manufacturing as policy, semiconductors will naturally be included.” He emphasized, “To build a memory chip fab (production plant), various requirements must be met, including electricity, clean water, and large-scale land,” and “If there is a location that meets those conditions, it does not matter whether it is in the United States or anywhere else in the world.”
Regarding the fact that U.S. Commerce Secretary Howard Lutnick also asked SK hynix and Samsung Electronics to invest in the United States at the previous day’s concrete-pouring ceremony for Micron’s fab in Clay, New York, Chey drew a line, saying, “For people running businesses, doing something to match the U.S. election schedule or someone’s term is not a consideration.” Chey added, however, “The important point is the fact that the largest market is in the United States and a considerable number of clients also come from the United States,” and “Clients strongly want suppliers to maintain security and also want facilities built in the United States, so we will decide after looking at this.”
Chey also repeatedly urged that even if SK hynix builds an additional plant in the United States, this should not be interpreted as a shrinking of Korea’s manufacturing capacity. Chey said, “This industry is no longer a zero-sum game, and we need more supply capacity,” and “We must of course consider the option of investing in the United States, but that does not mean we will definitely build a plant in the United States.”
Regarding the AI market, Chey put weight on the view that the current surge in demand will continue for a considerable period. Chey diagnosed, “When demand increased, there was a boom, and when supply increased, there was a downturn, but now (the semiconductor industry) clearly does not move in the same cycle as before,” and “Right now the gap between demand and supply is enormously large, and in terms of growth speed, demand is exceeding supply.” His analysis was that memory chip supply faces limits because production facilities must be carefully selected and built, while demand has not stopped surging due to increased use of AI tokens (the basic unit of a word or sentence). Chey asserted, “As even ordinary people use AI tokens enormously and must store them somewhere without deleting them, the key-value (KV) cache is increasing,” and “The AI we see now is only at the level of a 4-to-5-year-old child, so to reach AGI (artificial general intelligence, AI that learns, reasons, and solves problems on its own like a human), it must learn a very large amount of information, and the only storage medium for that can be memory chips.” He added, “As technological revolutions continue to occur, we will use less high-bandwidth memory (HBM) and DRAM, and storage and compression technologies will advance, but there is little way to stop the phenomenon of memory itself increasing.”
Chey also cited the point that if memory chip prices become too expensive, the industries that serve as sales destinations could shrink, as grounds for the need to expand supply. Chey pointed out, “The market is not only in AI, so if memory prices become too expensive, mundane industries such as retail and automobiles will struggle, and the semiconductor market will die too,” and “When I go to Japan, I say we are reviewing a Japanese plant, and when I go to the United States, I say we are reviewing the United States, but even making maximum investment would not be enough.”
In this regard, Chey shared an anecdote that he had stopped by California to meet clients before coming to New York, saying he repeatedly heard only the common question, “How will you increase output and supply?” Chey lamented, “If this were demand that would end in one or two years, we would not even have drawn up (expansion) plans,” and “Fixed-rate style requests have almost disappeared, and clients are demanding far more memory chips than I had thought, and while we too are trying to build supply facilities as quickly as possible, a memory chip plant cannot be built easily just because you have the money.”
Regarding the pursuit by China’s semiconductor industry, he argued, “By the time you feel threatened, it is already too late,” and “We must move a bit faster and continue to expand our AI technology portfolio.” Chey said, “Chinese companies are moving out of the red into the black, and they are gaining considerable profits through initial public offerings (IPOs), continuing to build ample capacity for capital expenditure,” and “We are preparing with the resolve that it is only natural that China will catch up at a fairly rapid pace.”
That day, Chey also attended the “opening bell” ceremony marking SK hynix’s ADR listing on the Nasdaq market, held ahead of the briefing. Through this IPO, SK hynix will raise 26.5 billion dollars (about 40 trillion won), the largest ever for a foreign company in the United States.