SEOUL — South Korea’s ruling party is working to make it easier for chipmaker SK Hynix to partner with outside investors when building new manufacturing facilities, as part of a broader national push to become a dominant force in artificial intelligence.
Lawmakers from President Lee Jae Myung’s Democratic Party of Korea have put forward a proposal to amend existing legislation covering “strategic industries with cutting-edge technologies.” Under current law, a subsidiary of a subsidiary is prohibited from forming such investment partnerships.
SK Hynix is a unit of SK Square, which itself is a unit of SK Inc. If the amendment passes, SK Hynix would be allowed to bring in outside capital for new chip factories, provided it holds at least a 50% stake in any joint venture it creates.
The proposed change is particularly significant for SK Hynix because of how the company is structured. Other large South Korean business groups maintain control over their key subsidiaries through complex networks of cross-shareholdings rather than direct ownership chains. SK Hynix is the top producer of high-bandwidth memory chips used in Nvidia’s artificial intelligence processors.
Last week, SK Hynix completed a high-profile share sale on a U.S. stock exchange, raising $26.5 billion. However, analysts expect the company will need considerably more funding to carry out its ambitious plans to expand chip production.
The South Korean government has laid out plans to develop new semiconductor manufacturing sites in the southwestern part of the country. Both SK Hynix and Samsung Electronics have each committed to investing 400 trillion won — roughly $268 billion — toward those efforts.
In the draft bill, lawmakers argued that South Korea needs “fast construction of fabs to win against other major countries and companies,” and noted that companies can no longer rely solely on traditional methods of raising capital to cover such enormous costs.
The proposed law would also require any newly formed venture to be headquartered or have its main office located outside the greater Seoul metropolitan area, consistent with government efforts to boost economic activity in other regions of the country.
SK Hynix shares listed in Seoul fell 8.6% on Tuesday, extending steep losses from the previous session as early excitement over the company’s debut on the Nasdaq stock exchange began to fade.
