SK Innovation to Raise 900 Billion Won via SK China Capital Reduction for Domestic Projects

SK Innovation is set to secure 900 billion won (approximately $650 million) through a capital reduction of its Chinese subsidiary, SK China. This strategic financial maneuver is aimed at bolstering investments in crucial power infrastructure for the development of a major semiconductor cluster and artificial intelligence (AI) data centers in South Korea's Honam region.

The plan involves an upcoming board meeting where SK Innovation will vote on restructuring its overseas investment entities. By reducing its stake in SK China, the company aims to channel the capital towards essential energy projects. SK China, which oversees the SK Group's business operations in China, is jointly owned by various group affiliates, including SK Inc., SK Telecom, and SK Hynix.

Following the capital reduction, SK Innovation and its affiliates like SK Geo Centric and SK On will see their combined stake in SK China decrease from 33% to about 10%. Conversely, the stakes held by SK Inc., SK Telecom, and SK Hynix are expected to increase. This adjustment is seen as a strategic realignment to support large-scale domestic projects.

The substantial capital infusion is primarily driven by the ambitious 400 trillion won semiconductor cluster project planned for the Honam region. Developing such a large-scale production hub necessitates significant investment in power infrastructure. Industry analysts believe the funds raised will be directly allocated to stabilizing and expanding the power supply chain.

This development is expected to create a "full-stack" ecosystem around AI data centers, encompassing semiconductor manufacturing by SK Hynix, AI services by SK Telecom, and energy supply by SK Innovation. Despite the reduced stake in SK China, SK Innovation intends to continue its existing oil, chemical, and battery businesses in the Chinese market.