SK, marking its 64th anniversary on April 8, is no longer a company dependent primarily on domestic demand, but an exporter company. SK Group posted $52.4 billion in group-wide exports last year, accounting for 11 percent of Korea’s total exports during the year. The group with domestic demand business portfolios, including refinery and telecom, has turned into a big exporter thanks to the group’s acquisition of SK Hynix in 2012.
SK’s anniversary comes 64 years after late founder Chey Chong-kun established Sunkyung Textile.
Negative views had prevailed when SK Group took over SK Hynix for 3.3 trillion won, surpassing the market consensus, but it is now helping improve the group’s fundamentals, a group official said.
SK Group Chairman Chey Tae-won has stressed the need for nurturing new growth engines, saying that its business structure, focusing on energy and chemicals, could be faced with saturation or “slow death.” He gave the nod to the group’s acquisition of SK Hynix, which was weighed down with 9.36 trillion won in debts and 1.7 trillion won in accumulating losses.
As semiconductor prices plunged after SK Group’s acquisition of the semiconductor unit, rival companies reduced investments, but Chairman Chey opted to increase investments. His move has now begun to pay off. SK Hynix plans to set aside 7 trillion won for R&D outlays this year. The company’s R&D outlays increased from 934 billion won in 2011 to 2.0967 trillion won in last year, accounting for 12 percent of sales.
SK Telecom, SK Hynix, SK C&C and other ICT subsidiaries of the group chalked up 37.4 trillion won in combined sales in 2016, more than twice 17.6 trillion won in 2011 before SK Hynix was acquired. The companies saw exports jump from 130 billion won to 17 trillion won, representing a 127-fold surge during the period. Not only SK Hynix, but also other ICT companies have maintained growth. SK C&C, which has once been classified as a company, fully depending on domestic demand, saw exports surge to 760 billion won, a 7-fold jump over five years ago.
Conventional mainstay subsidiaries, including SK Innovation, SK Energy, and SK Chemical, logged 51.3 trillion won in sales in 2016, including 30.2 trillion won in exports. The companies’ global partnership strategies have begun to bear fruits. SK Innovation has established an ethylene joint venture with China’s biggest state-run energy company Sinopec in Wuhan.
The ICT subsidiaries have been scrambling to brace for the advent of the 4th Industrial Revolution. In early April, SK Telecom inaugurated an artificial intelligence business division under the direct control of SK Telecom CEO. Korea’s largest telecom service provider is developing a connected car, a self-driving car employing 5G and IoT, as well as a quantum cryptography communication system, a next-generation security solution. SK C&C is developing an artificial intelligence “Aibril,” based on IBM’s artificial intelligence “Watson” to tap the medical field. SK Group Executive Vice President Lee Hang-soo said, “SK Group take a more than 10 percent share in the Korean export industry.”