SK Square, SK Hynix set up $77 million chip investment unit

SK Square Co. and SK Hynix Inc., together with two other South Korean companies, have launched a 100 billion won ($77 million) joint investment unit to acquire promising overseas chip components and equipment makers.

SK Square, the investment management arm of SK Group, said on Tuesday it has established TGC Square, the investment vehicle, in partnership with Shinhan Financial Group and LIG Nex1 Co., a leading defense company.

SK said the unit is open-ended, which means that other companies looking for investment opportunities can join them later.

Initially targeting Japan before expanding to the US and other countries, the unit aims to identify and invest in smaller companies with outstanding technological capabilities in the microchip materials, parts and equipment segment.

The move comes as countries around the globe are bolstering their supply chains amid intensified resource nationalism.

Choi Woo-sung, managing director in charge of chip sector investment at SK Square and head of SK Telecom Co.’s Japan office, will serve as the chief executive of TGC Square.

SK Square hired Cho Hee-joon, former head of BNP Paribas Japan, as the unit’s chief investment officer, and Yasuteru Miyamoto, a former Credit Suisse vice president based in Japan, as an executive in charge of investment screening.

FIRST TARGET: JAPAN’S HIGH-END TECH FIRMS

SK Square said it is closely watching high-end tech companies in Japan as its first investment target that can create synergy with SK Hynix, the world’s second-largest memory chipmaker.

About 60% of the 100 billion won joint investment will be spent on acquiring Japanese companies, it said.

An SK Square official said potential investment targets include a semiconductor inspection equipment maker, an eco-friendly chip part manufacturer, an AI chip developer and a next-generation chip materials developer.

In recent years, Tokyo has unveiled a host of state subsidies and incentives to attract investments from global chipmakers.

Through its chip sector nurturing policy, Japan has secured some 2 trillion yen in investment from Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest foundry player, and US chipmaker Micron Technology Inc.

According to an industry research note, foreign investment in Japanese chip startups stood at 780.1 billion yen in 2021, a fivefold increase from eight years earlier.

VALUE-UP MEASURES

After investing in growth companies, SK Square and SK Hynix said various value-up measures will be implemented to increase their corporate value. For example, SK companies will provide tech support and assist in their eventual share sales through initial public offerings.

Spun off from Korea’s top mobile carrier SK Telecom in 2021, SK Square is SK Group’s intermediate holding company, essentially an investment firm seeking new opportunities in non-telecom sectors.

Currently managing about 20 portfolio corporates, SK Square is expected to realize some capital gains through divestments and then invest in new target firms.

It has invested in promising business sectors such as the metaverse, agricultural technology and cryptocurrency.

Last month, SK Square liquidated Grab Geo Holdings, a joint venture with Grab Holdings Ltd. by selling its entire stake in the Southeast Asian ride-hailing startup.

Write to Jeong-Soo Hwang at hjs@hankyung.com
In-Soo Nam edited this article.