Chey Tae-won: "Joint production with Kioxia possible... Considering construction of semiconductor plant in Japan"

[Financial News Tokyo = Correspondent Seo Hye-jin] SK Group Chairman Chey Tae-won stated that he is considering building a semiconductor factory in Japan, adding that "joint production with Japan's Kioxia is also one option." Following his statement on the 31st that investment in Japan is "currently in the review stage," he presented more specific plans for possible cooperation with Kioxia, including joint production, research and development (R&D), and supply chain sharing.
According to the Asahi Shimbun on the 2nd, Chairman Choi made these remarks in an interview the previous day, stating, "Kioxia is a company with many strengths."
SK Hynix and Kioxia are connected by an investment relationship, despite competing in the NAND flash market. SK Hynix indirectly holds a stake in Kioxia through a special purpose company (SPC) operated by Bain Capital. Converting the convertible bonds issued by the SPC into shares would allow SK Hynix to increase its influence over Kioxia.
Chairman Choi cited Kioxia establishing a joint venture with SanDisk of the United States to jointly produce key products as a cooperation model. He mentioned the possibility of building a joint factory, stating, "If SK Hynix is ​​included in Kioxia's future strategy, we are willing to become a partner at any time."
He also stated that the investment relationship could be terminated if it is difficult to develop the investment into business cooperation. Chairman Choi said, "If we can no longer establish any cooperative relationship, we will terminate our investment in Kioxia."
SK Hynix has been reviewing cooperation in the NAND business with customers and partners. SK Hynix CEO Kwak No-jung recently stated, "We are carefully reviewing ways to jointly develop the NAND flash market with customers and partners."
The cooperation between the two companies could also influence the landscape of the global NAND market. According to Counterpoint Research, Samsung Electronics ranked first in NAND shipment share from April to June this year with 25%, followed by SK Hynix with 22% and Kioxia with 14%. The combined market share of SK Hynix and Kioxia is 36%, surpassing that of Samsung Electronics.
The background behind Chairman Choi’s consideration of expanding overseas production bases, including Japan, lies in the supply shortage of memory semiconductors caused by the spread of generative artificial intelligence (AI). Chairman Choi assessed that memory semiconductors for data centers are "20–30% short" of demand, stating that it is difficult to meet this demand solely through the large-scale investments currently underway in Korea.
Japan has a concentration of semiconductor manufacturing equipment and materials companies. It is home to semiconductor materials company Namics, a supplier to SK Hynix, and equipment manufacturer Tokyo Electron, as well as major clients such as Sony Group and Nintendo. The U.S.-based Micron Technology also operates a semiconductor factory in Hiroshima.
Citing such industrial infrastructure and a culture that values ​​manufacturing, Chairman Choi assessed that "Japan is a very attractive candidate location even from the perspectives of risk and culture." As several Japanese local governments are vying to attract an SK factory, the Asahi Shimbun reported that concrete investment plans could be announced as early as within this year.
The Japanese government's active support for semiconductor investment is also a factor that enhances Japan's competitive edge. The Japanese government has injected large-scale subsidies into the construction and expansion of production facilities by overseas companies, such as Taiwan's TSMC's Kumamoto plant.
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