Second biggest chipmaker in South Korea to allocate 75 billion for AI investments until 2028

South Korean chipmaker SK Hynix, the second largest in the country after Samsung, has announced plans to invest a whopping $74.6 billion in the next three years to develop memory chip technologies focusing on artificial intelligence (AI).
Additionally, its parent company SK Group aims to secure an additional $57.8 billion by 2026 to further support its AI initiatives, according to a report from Reuters.
The decision comes as SK Group has faced significant losses through Hynix and its vehicle battery subsidiary. If the additional funding is secured, the total investments will amount to nearly $133 billion. This is a substantial amount, considering that SK Hynix alone has a market capitalization of about $118 billion as of the time of the article’s publication.
Clearly, SK Group sees the investments and the increased focus on developing AI technologies as a means of recovering from the reported losses and securing the company’s financial future.
The shift towards AI will also lead to streamlining operations, as SK Group plans to reduce its subsidiaries from the current count of “more than 175” to a number more aligned with the group’s current targets and ambitions.
In the competitive world of artificial intelligence, big tech giants like Google, Microsoft, and Nvidia dominate the enterprise level. However, the semiconductor market is a different story.
As more technology companies enter the AI space and big tech continues to push boundaries, the demand for chips capable of training AI systems has surged, leading to a global shortage.
SK Group believes that its investment strategy will increase its profits from a projected $16 billion in 2024 to nearly $30 billion by the end of 2025.
In related news, AI tokens are rallying as NVIDIA slumps 13% from its market cap peak.