SK Hynix Plans $74.6 Billion Investment in AI Memory Chip Development
Summary:
South Korea's SK Hynix intends to invest $74.6 billion in next three years to develop memory chips for artificial intelligence (AI). The parent company SK Group, plans to raise additional $57.8 billion by 2026 for AI efforts, following significant losses through Hynix and its vehicle battery subsidiary. The company sees the AI investment as a way to recover losses and secure financial stability. It also plans to streamline its operations and reduce the number of subsidiaries. The group expects the investment to increase its profits from $16 billion in 2024 to nearly $30 billion by end of 2025.
South Korea's SK Hynix, positioned behind Samsung as the country's second biggest chipmaker, plans to pour $74.6 billion into the development of memory chip technology for artificial intelligence (AI) applications over the next three years. The chipmaker's parent company, SK Group, is reportedly looking to gather an additional $57.8 billion to bolster AI-focused efforts by the year 2026, according to information from Reuters. Recent times have observed SK Group absorbing sizeable economic blows through both Hynix and its automobile battery branch. If the secondary investment materializes, the resulting total investment comes close to $133 billion - figures reveal the current market capitalization of SK Hynix alone circles around $118 billion at this article's time of writing. The SK Group foresees that the resource allocation, combined with an intensified focus on AI tech advancement, will assist in recovering from reported losses and solidifying the company's financial stability. The shift towards AI could potentially simplify the group's workflow. The conglomerate is anticipated to streamline its subsidiaries, reducing its current number from "over 175" to a level better suited for the group's objectives and aspirations. The AI field is extremely competitive, with major tech companies such as Microsoft, Nvidia, and Google doing much of the business. However, competition in the semiconductor market sees even more rivalry. While large firms like Microsoft, Nvidia, and Apple vie for top valuation, the chip maker market reaches well beyond the borders of Silicon Valley. In tandem with more tech firms entering the AI space, and big tech consistently pushing boundaries, the demand for chips (specifically those designed to train AI systems) has surged, inciting a global shortage. SK Group purportedly suspects its current investment plan will increase its projected profits from $16 billion in 2024 to almost $30 billion by the close of 2025. Related news shares that AI-based tokens are rallying while NVIDIA experiences a 13% fall from its market cap peak.
Published At
6/30/2024 11:30:13 PM
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