SEOUL, July 14 (Reuters) – South Korea’s ruling party is seeking to make it easier for chipmaker SK Hynix to set up ventures to build factories with outside investors — a move that follows a government push to position the country as an AI powerhouse.
Members of President Lee Jae Myung’s Democratic Party of Korea have proposed amending a law pertaining to “strategic industries with cutting-edge technologies” that currently forbids a subsidiary of a subsidiary from such a move.
If passed, chipmaker SK Hynix — which is a unit of SK Square which is in turn a unit of SK Inc — will be able to attract outside capital for its new fabs if it retains a stake of at least 50% in such a joint venture.
The law primarily affects SK Hynix, the leading developer of high-bandwidth memory used in Nvidia’s AI processors. Other major South Korean conglomerates maintain less direct control over their prized units, instead exerting control through a complicated web of cross-shareholdings.
SK Hynix raised $26.5 billion last week in a high-profile U.S. share sale, but is expected to need far more funds to finance aggressive chip expansion plans.
The government has outlined projects that aim to build new semiconductor production sites in the country’s southwest. SK Hynix and Samsung Electronics have pledged to invest 400 trillion won ($268 billion) each.
South Korea needs “fast construction of fabs to win against other major countries and companies,” the lawmakers said in the draft bill, adding that companies can no longer cover such costs with traditional capital raising.
The proposed amendment would also require any new venture to have its headquarters or main office outside the greater Seoul area, in line with government efforts to stimulate regional economies, the lawmakers said.
SK Hynix’s Seoul-listed shares were down 8.6% in Tuesday trade, extending sharp losses on Monday as euphoria surrounding its Nasdaq debut fades.
($1 = 1,493.5000 won)
(Reporting by Heejin Kim; Editing by Edwina Gibbs)
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