Chey Tae-won: "Joint production with KIOXIA is possible; continued investment depends on cooperation"

【Financial News Tokyo=Correspondent Hye-jin Seo】SK Group Chairman Chey Tae-won said that "joint production with Japan’s KIOXIA is one option" and that he was considering building a semiconductor plant in Japan. After saying on the 31st of last month that investment in Japan was "under review," he offered a more detailed outline of possible cooperation with KIOXIA, including joint production, research and development (R&D), and supply-chain sharing.
According to The Asahi Shimbun on the 2nd, Chey made the remarks in an interview the previous day, saying, "KIOXIA is a company with many strengths."
SK hynix and KIOXIA compete in the NAND flash market while also being linked through an investment relationship. SK hynix indirectly holds a stake in KIOXIA through a special-purpose company (SPC) operated by Bain Capital. If the SPC converts the convertible bonds it issued into shares, SK hynix could increase its influence over KIOXIA.
Chey cited KIOXIA’s model of establishing a joint venture with U.S. company SanDisk to jointly produce its core products as a possible cooperation model. "If SK hynix becomes part of KIOXIA’s future strategy, we are willing to become a partner at any time," he said, also mentioning the possibility of building a joint plant.
Chey also indicated that the investment relationship could be ended if it proves difficult to develop it into business cooperation. "If we can no longer establish any cooperative relationship, we will end our investment in KIOXIA," he said.
SK hynix has been considering cooperation in its NAND business with customers and partner companies. Noh-Jung Kwak, CEO of SK hynix, recently said, "We are carefully reviewing ways to jointly develop the NAND flash market with our customers and partner companies."
Cooperation between the two companies could also affect the global NAND market landscape. According to Counterpoint Research, Samsung Electronics ranked first with a 25% share of NAND shipments from April to June this year, followed by SK hynix with 22% and KIOXIA with 14%. Combined, SK hynix and KIOXIA held 36%, exceeding Samsung Electronics’ share.
Chey’s consideration of expanding overseas production bases, including in Japan, is driven by a shortage of memory semiconductors resulting from the spread of generative artificial intelligence (AI). He assessed that memory semiconductors for data centers were "20–30% short of demand" and said that large-scale investments currently under way in South Korea alone would not be enough to meet demand.
Japan has a concentration of semiconductor equipment and materials companies. They include Namics, a semiconductor materials company that supplies SK hynix, and Tokyo Electron, an equipment maker. Japan is also home to major customers such as Sony Group and Nintendo. U.S. company Micron Technology operates a semiconductor plant in Hiroshima.
Citing this industrial base and Japan’s culture of emphasizing manufacturing, Chey said, "Japan is a very attractive candidate, even from the perspectives of risk and culture." As several Japanese local governments seek to attract an SK plant, The Asahi Shimbun reported that a specific investment policy could be announced as early as this year.
Active support from the Japanese government for semiconductor investment is another factor enhancing Japan’s competitiveness as a production location. The Japanese government has provided large subsidies for the construction and expansion of production facilities by overseas companies, including Taiwan Semiconductor Manufacturing Company’s (TSMC) plant in Kumamoto.
SK hynix is also expanding its investment in the United States. On the 27th of last month, it held a groundbreaking ceremony in West Lafayette, Indiana, for a next-generation high-bandwidth memory (HBM) advanced packaging plant. If the investment in Japan is finalized, the company will further expand its overseas production base after the United States.
Chey also emphasized his vision for a Korea-Japan economic community at the Korea-Japan Symposium on Low Fertility Countermeasures held in Sendai on the 30th of last month. "When the population is declining, we need to expand the market," he said. "To create a larger market, the two countries need to strengthen their ties to the level of a community."
Regarding the report, KIOXIA said, "We are collaborating with SK hynix on MRAM R&D, and SK hynix is one of our DRAM suppliers," adding, "We want to maintain a good relationship going forward."
[email protected] Hye-jin Seo Reporter