SK Group Chairman Chey Tae-won is considering the possibility of joint production with Japanese NAND flash manufacturer Kioxia. As the demand for memory for data centers surges due to the expansion of artificial intelligence (AI), he is exploring options to secure new production bases in Japan while also broadening the scope of collaboration with Kioxia to include research and development (R&D) and supply chain sharing.
In an interview with Japan's Asahi Shimbun on September 2, Chey described joint production with Kioxia as "one option," noting that "Kioxia is a company with many strengths."
The potential collaboration is not limited to production alone. Chey expressed that various forms of cooperation, including R&D and supply chain sharing, are possible.
Just as Kioxia produces its main products in partnership with U.S.-based SanDisk, there is also the possibility of establishing a new collaboration framework with SK Hynix. Chey stated, "If SK Hynix is included in Kioxia's future strategy, I am always open to being a partner."
The consideration of Japan as a new production base is driven by the rapid increase in AI memory demand. Chey assessed that the current supply of memory semiconductors for data centers is "20-30% short" compared to demand.
He explained that it is challenging to meet the surging demand solely through large-scale investments in South Korea, prompting the exploration of building new factories overseas, including in Japan. Japan is particularly attractive as a candidate due to its established semiconductor materials, components, and equipment ecosystem, as well as its manufacturing base.
The Japanese government's accelerated efforts to rebuild the semiconductor supply chain also serve as a positive factor. Japan is actively supporting investments from foreign semiconductor companies like TSMC and Micron, aiming to attract advanced semiconductor production facilities.
If collaboration between SK Hynix and Kioxia materializes, it is expected to significantly impact the global NAND market. According to Counterpoint Research, in the second quarter of this year, Samsung Electronics held the top position in NAND shipment market share at 25%, followed by SK Hynix at 22% and Kioxia at 14%.
If the market shares of SK Hynix and Kioxia are simply combined, they would total 36%, surpassing Samsung Electronics. Strengthening cooperation in production, R&D, and supply chain could lead to changes in the competitive landscape of the NAND market.
The capital relationship between the two companies is also a variable for future collaboration. SK Hynix holds convertible bonds issued by a special purpose company (SPC) led by Bain Capital, Kioxia's largest shareholder. Converting these bonds into shares would secure voting rights in Kioxia.
However, according to an agreement with Kioxia, SK Hynix cannot hold more than 15% of voting rights, directly or indirectly, without Kioxia's consent until the year after next. Given that the two companies are competitors, the future collaboration methods and adjustments in shareholding will be crucial.
Chey hinted at the possibility of ending the investment relationship if substantial cooperation does not materialize, stating, "If we can no longer establish any cooperative relationship, I will terminate the investment in Kioxia."
* This article has been translated by AI.
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