The alliance comes as SK hynix celebrates the 10th year since joining the SK Group and SK Square successfully spun off from SK Telecom.
At last week’s CES 2022, SK Telecom, SK Square, and SK hynix launched the ‘SK ICT Alliance’ to jointly develop and invest in ICT convergence technologies, and create global market opportunities.
The alliance comes as SK hynix celebrates the tenth year since joining the SK Group and SK Square successfully spun off from SK Telecom, marking the beginning of a new era of synergies between semiconductor, telecommunication and investment.
With the aim to secure global competitiveness in diverse ICT areas such as semiconductors, 5G and AI, the three companies plan to carry out joint business activities in the global market by leveraging SK Square’s innovative investment, SK Telecom’s AI and 5G technologies and SK hynix’s future semiconductor technologies.
From January 2022, the three companies will operate ‘Synergy Council’ chaired by Vice Chairman Park Jung-ho, and joined by Ryu Young-sang, CEO of SK Telecom, and Lee Seok-Hee, CEO of SK hynix. The Synergy Council will be the highest decision making body, where the executives discuss R&D cooperation and joint investments in semiconductor and ICT areas, and promote global market expansion.
Increasing the presence of SK Telecom’s self-developed AI semiconductor SAPEON
The Alliance will first create synergies in introducing SK Telecom’s AI chip SAPEON to the global market. The three companies will jointly invest to establish SAPEON Inc. in the U.S. and make inroads into the global AI semiconductor market. SAPEON is SK Telecom’s self-developed AI chip launched in November 2020. Although it is about half the price of a graphics processing unit (GPU), its deep learning computation speed is 1.5 times faster and it uses 20% less power than GPU.
SK Telecom plans to lead the development of SAPEON-related technologies by leveraging its R&D capabilities and service experience accumulated in 5G and AI. In the mid-to long-term, the company will expand its SAPEON model lineup by developing AI chips dedicated to data centers and autonomous driving.
SK Telecom will also promote synergies between its AI semiconductor and SK hynix’s semiconductor memory technologies, while also attracting strategic and financial investors in cooperation with SK Square.
SAPEON Inc. will serve as an outpost for expanding the AI semiconductor business to the global market by attracting U.S.-based big tech companies as major clients. It will also secure an edge in luring semiconductor development experts and drawing in outside investors. Moreover, as the subsidiary of SAPEON Inc., SAPEON Korea will take charge of business in Korea and the Asian region.
Projecting that the convergence of AI and metaverse will define the future world of ICT, SK Telecom plans to innovate its three key services, T Universe, Ifland and AI Agent, in an accelerated manner. Moreover, it will also introduce new services by adding connected intelligence to future devices such as UAM aircrafts, self-driving cars and robots.
“By proactively responding to changes taking place in the areas of AI, metaverse and 5G, we will prepare ourselves for the next decade,” said Young-sang.
Creating an ICT investment capital of over KRW 1 trillion
SK Telecom, SK Square, and SK hynix plan to establish a base to make investments overseas this year and attract investment from overseas financial investors to create and operate a total investment capital of over KRW1 trillion. Detailed discussions on investments are already underway with prominent global investors.
With this investment capital, the three companies will actively invest in companies with innovative technologies such as AI, metaverse, block chain and semiconductors.
Through these investment activities, they will be able to stay ahead of the convergence trend within the ICT industry and discover unicorns that can change the industrial landscape, which will lead to valuable business synergies.
SK Telecom and SK hynix will be able to strengthen business partnerships with the companies they invested in or even secure an advantage in the acquisition of these companies in the future. SK Square expects to build a good track record as an investment company, while increasing its corporate value.
According to market research company Mergermarket, the size of the global buyout market reached around KRW 1,400 trillion (USD 1.172 trillion) in 2021, increasing by about twofold from the previous year. Industries are being rapidly reorganized via M&As between global companies, and those that fail to keep up with this trend are left behind the competition.
SK hynix to increase its global market presence through ‘Inside America’ strategy
SK hynix aims to become a top global tech company that leads the rapidly changing ICT industry.
Recently, the semiconductor market is witnessing more diversified demand from sectors like AI, autonomous driving and metaverse, and pluralization is taking place within the system architecture field like CPU, GPU and MPU. Since the existing law of competition no longer applies to this market, it is imperative for companies to develop new business models and technologies to remain competitive.
With the acquisition of Intel’s NAND and SSD business, SK hynix is now fully set to strengthen the competitiveness of its NAND flash business. The company also aims to break away from its existing role as a semiconductor supplier and become a company that leads future technologies along with global ICT companies.
Moreover, SK hynix will carry out its ‘Inside America’ strategy in the U.S., world’s largest ICT market and battlefield, to enhance its business competitiveness and expand into new partnerships. It will also establish a new business unit and R&D center in the U.S. Based on SK hynix’s competitiveness, the three companies expect to strengthen their collaboration with global ICT companies.
“SK hynix will take a leap to become a top-notch global tech company by offering more innovative technologies and products, and creating value for the society and humanity,” said Seok-Hee.
Meanwhile, SK Square plans to accelerate the creation of synergies among the three companies by making innovative investments. In response to SK hynix’s moves towards global market expansion and new technology development, SK Square will make joint investments in the semiconductor ecosystem. In parallel, it will increase its investment in platforms that will drive future innovations such as metaverse and blockchain.
SK Square will also enter the new global block chain market by leveraging Korbit, a virtual asset exchange it recently invested in, and build a blockchain-based economic system in collaboration with SK Telecom’s metaverse platform Ifland.
“This year, the SK ICT Alliance will join forces to achieve new innovations and make a big leap forward in the global market,” said Jung-ho. “As leading players in the global semiconductor and ICT industries, we will also make best efforts to contribute to the Korean economy.”