Chey Says SK Could Pursue Joint Production With Kioxia in Japan

Investment Plan Could Be Announced This Year

Signals Stake Exit if Cooperation Falls Through

SK Group Chairman Chey Tae-won said joint production with Japan's Kioxia Holdings Corp. is one option and that he is considering building a plant in Japan. The remarks suggest SK is weighing Japan as a key overseas production base with Kioxia, in which SK Hynix has an indirect investment, as the spread of generative artificial intelligence worsens a global memory-chip shortage.

Chey told the Asahi Shimbun in an interview published on Sept. 2 that Kioxia has "many strengths" and that cooperation could take various forms, including joint production, research and development, and supply-chain sharing. Referring to Kioxia's production structure through a joint venture with Sandisk, he said SK Hynix is ready to partner with the Japanese company if it becomes part of Kioxia's future strategy. He also indicated that jointly building a plant is a possible option.

A key reason Chey is looking to Japan is an AI-driven shortage in memory supply. He said memory for data centers is currently 20% to 30% short and that expanding domestic production lines alone would not be enough to meet rapidly growing demand. He cited Japan's dense ecosystem of materials, parts and equipment suppliers, as well as its solid manufacturing base, as attractions. Chey added that multiple Japanese local governments have already approached SK about hosting a plant and suggested a detailed investment plan could be presented within the year.

If the two companies team up, the global NAND market could be reshaped. According to Counterpoint Research, second-quarter NAND market share this year was 25% for Samsung Electronics Co., 22% for SK Hynix Inc. and 14% for Kioxia. Combined, SK Hynix and Kioxia would hold 36% of the market, enough to surpass Samsung and become the world's largest player.

The biggest variable in the talks is SK Hynix's stake in Kioxia, market participants say. SK Hynix holds about ¥129 billion of Kioxia convertible bonds. If converted into common shares, the bonds would give SK Hynix a direct stake of about 15% and make it a key shareholder. Hurdles remain, including antitrust reviews in multiple countries, an agreement limiting voting ownership to 15% through 2028, and opposition from the Japanese government.

Chey also suggested he would exit the investment if cooperation fails to materialize. "If we can no longer build a cooperative relationship, we will end the investment," he said.

Kim Chae-yeon, reporter / Tokyo: Choi Man-soo, correspondent why29@hankyung.com