South Korea’s ruling party is proposing law changes to allow SK Hynix to raise external capital through joint ventures for new AI chip factories. This legislative move aims to support the massive funding needed for semiconductor expansion, while requiring new plants to be built outside the Seoul region. The change would permit SK Hynix to retain a 50% stake in these new ventures.
South Korea is moving toward easing regulatory hurdles for major semiconductor manufacturers, specifically targeting capital-raising rules for companies like SK Hynix. The proposed legislative amendment is designed to help chipmakers form joint ventures with external investors to finance the construction of new fabrication plants. Currently, South Korean law limits the ability of a subsidiary of a subsidiary to raise capital in this manner. If passed, the change would permit SK Hynix, a subsidiary of SK Inc., to partner with outside investors provided it maintains at least a 50% ownership stake in the venture.
This legislative initiative is closely tied to South Korea’s national strategy to strengthen its position in the global artificial intelligence chip market. As a critical supplier of high-bandwidth memory chips—which are essential for modern AI processors—SK Hynix requires significant capital to scale its production capacity. The company recently completed a large $26.5 billion share sale in the United States, underscoring the high cost of building advanced semiconductor facilities.
Beyond just capital access, the proposed bill includes a geographic condition aimed at decentralizing the industry. To receive support for these new joint ventures, companies would be required to locate the primary offices of these new production sites outside the Seoul metropolitan area. This aligns with broader government efforts to promote economic development in South Korea's regional provinces.
This move comes at a time when the semiconductor industry is facing intense competition. Both SK Hynix and its primary domestic competitor, Samsung Electronics, have announced plans to invest approximately 400 trillion won each in new production sites located in the country's southwest. For investors, the ability to bring in external partners for these massive projects could potentially reduce the direct financial burden on the company’s balance sheet. However, the success of this strategy will depend on the company's ability to secure suitable partners and the speed at which these new facilities can be brought online. The next steps will involve the legislative process and, if approved, the subsequent formation of the first joint venture entities under the new rules.