SK Chairman Chey Tae-won on SK Hynix Debut, AI Demand and US Plans

0:00 A sensible place to start is why now? You've been thinking about a US listing for some time, but why put SK Hynix in front of US investors now? Well, we've been waiting for that for a long, long time. And since I acquired that Hynix about 15 years ago. So this isn't one of my sons. Well, we have to go to access to the the US capital market. So now dream comes true. So people are asking why now. But well this is kind of early in the moment. Well, we can we can have the earliest moment possible. $26.5 billion is a lot of money.

0:45 But in the context of SK's commitment in domestically, in Korea and internationally, not so big can we expect multiple returns to Adas, The sale of multiple rounds of Adas. Well, yes. I'm expected. we can we can deliver, those things too. So, we'll try to expand that our ideal size. And also, better. That actually requires a better return.

1:16 So once we had the better return, then there is a more demand. So. So first thing is that we have to keep the, stock price stable, and, well, hopefully in a long run. Then while we can have that, the upside potentials. and I see that the world this moment. So this is a I era. So, this I era is, actually spike that the a lot of demand for the the memory. So this is the kind of time, for us. Is this something near-term?

1:49 Did you, with the leadership group and your CFO, say we will need to do this with regularity, or you haven't discussed that yet? Well, to tell you the truth, yeah, we've been discussing that one, but, I cannot just saying that, the in a detail yet. So I appreciate that, chairman J. The US listing gives SK a new source of equity capital. Mhm. But what about the broader US capital markets? Do we see SK Group SK Hynix as well become an issuer. Global bonds global debt.

2:25 Well that's a possible. But I guess right now well we have enough cash for that. the SK Hynix some other company could actually issuing that the another the bond and well yeah, that's, that's that the capital market. Chairman Chey right. Bear with me. I'm going to get this out for our audience around the world. This is why we're all here, right? This. You can't even see it. Tiny HBM for a high bandwidth memory.

2:58 12 layers in this case, right? The whole world knows about this. How severe and how tight is the supply right now of HBM? And more importantly, how long is that going to last? Do you have a sort of a year where you see the supply situation changing? Well, if you really understand, the, the old requirement and the condition for that, that HBM memory type and you have to understand that the AA first so people know is that the, large language model.

3:34 Yes, yes. But, that large language model as, well, very important things. But, I guess in the future it's, the what we're using that I and I actually requires a more, the inference phase. Yes. But, see that memory? The mean is a key. be caching so well it generated a lot of KB caching the due to that the keeping that the, the performance of the, the Lem then you should have that the wall logic, some volume of the, the KB caching and the you have to actually this is kind of a memory in the, in of people that, it's the same thing the we store that the memory, you know, the our brain and.

4:21 Yeah I need that the wall those kind of, KB caching that memory has to store somewhere. So if you had at the world better size up the memory than a better performance. And so it's a simple it's that and that memory, cycle is, well, it's turned into well, it's a, it's a different, different cycle. I shouldn't say that. The cycle different momentum. So and back then, the old days, the memory chip is, memory chip demand is a, actually depends on the, the number of people. Number of the hardware set.

4:58 That was a consumer electronics story in part, yes. Boom and bust. Yeah, yeah. One mostly. Well, you had that the you own a smartphone, but you don't need that the well tens of different, type of the smartphone you and you using that to just one like a PC, right. So, the demand is, actually the, limited by that, the number of the people. But in I era, as the different you may use that the you own, a yeah. Agent in a, probably in a few years from, from now then, you might had that the tens over the hundreds different of your own agent so that every agent need that a lot of memories because at the. Well, they created a lot of KB cash.

5:43 So you have to actually store somewhere that actually, needs that huge amount of the memory. Well, that's the, that's the I, the era. So I guess that minority business is, turning to that. well, it's a different stage. You still called it a cycle, though? That's the demand side. A reason to do the Adas is to raise capital, in part to boost capacity. your industry peers, micron had said very recently they have line of sight to supply improving 2028. The other side of 2027, in part because of the capacity that is coming online. What does SK Hynix see?

6:27 Well, we didn't talk to that our customers. So we just announced that, you know, five months ago. So we're going to double our capacity. Yes, within a five years. So, that means that the we've been doing that the business for more than 25 years. and then, well, with next five years, we're going to double our whole capacity as well. people see that the that's the unrealistic and the probably the oversupply and people worry about.

6:58 But my customers said that that's not enough. We need that more. So I double of the it's not it's not enough actually what they want all that the portable thing or the, you know, five times, six times. So, the more is the better, because that, well, demand will be exponentially, grow in a future based on that customer demand. What do they see, then? If they are the crystal ball, the lens to the future, they believe that their level of demand will stay where it is 2029, 2030.

7:35 How long does supply tightness respond to that? well, nobody expected the I don't know well, what what's going to happen in next years. But I'm saying that, well, I have some confidence. Then the the demand will be grow and, our supply capacity it never want to catch up. So, I don't know how long, but, well, if, I think, it's going to be until that, our society, human society has that there was some settlement with the AGI then.

8:11 Well, I guess that the world that's a kind of a normalize that the older, the cycles. But anyhow, that, until then, while we, we need that a lot of memories. You're with us live on Bloomberg Television and Bloomberg Radio worldwide, and we're in conversation with SK Group Chairman Chey Tae-won. And we're talking about a record for SK Hynix in terms of USD Oz. take me back to 2012.

8:42 SK Hynix. At the time people questioned that decision. What? What did they not see? What did they miss that you saw about the potential of that memory market? That's a kind of a bold decision. And it's, I think that the I made that, really risky bet, in a sense, up to the financially, because that the company had severely suffered from that, to that and also, has to, fighting with that is so and so Bible was at the wall 15 years ago. That company is, under control.

9:21 Buy it at the banks. as I simply said, chapter 11 and, yes, but in the sense of what we we doing that the banks is, it's a walk out program. So, but they doing that, more than ten years in the, work out programs, that actually means that nobody really wants that the work of this portfolio. Because it's it's too risky. Reason why as a well, memory business is cyclical and, that actually suffer from that the uncontrollable, cyclical business, cycle.

10:00 And it requires that the, every year, multi-billion dollar, CapEx, no matter no matter how. Yeah. So, even though you don't make that the money, but, that that business would require that, the machines and expand and, adapting new technologies and buying that the new equipment and they had to spend that huge size up to the CapEx. That's why. And nobody really wants that, those kind of danger business that you did that. Yes.

10:30 I see that will be different because that well, if you see that there was a different angle, this memory, manufacturing is most sophisticated, the manufacturing business. So if you Really do it, then you can do anything. I can crack the technology. The process? Yes. And also, the whole process of the manufacturing as a, it actually. Well, once you make that the little chips. But, chip inside that 380 billion transistor in it. Yes.

11:09 So that's the business. So how are we going to create that? The those kind of things and the it's a small, you know, small size in a, the silicon things. And we actually put it into, wow, huge size up the, the the transistors. That's a, that's a state of the art of the technology. So once you doing that and I can manage any things and the. Well, I can actually turn into anything also in digital world to create a lot of memory in a future. Right.

11:40 So that's all that. Yes. I, I just made a better under that. And, Well, people need that. The memory. Yeah. You talked about managing the process and the idea that, you know, at that time in 2012, debt was a very big consideration in the market. It was boom and bust, cyclical. How much is this? You've been asked about this a lot, but the idea of the long term agreement with customers changed that history. And right now there is a supply shortage.

12:13 And every customer's wants to have to secure that. the while they're when supply, the cover up the their own demand. So they asking us that the we need some kind of, the long term contract. So that's suggested by us and the what, they actually require that then that's maybe the proposal not ask, not ask. So they are more willing. Mhm. Well we also do love to do it because that the it's not a cyclical business anymore.

12:41 If we had at the sort of long term agreement as well. Even though it's a downturn and we still maintain that our volumes and, the certain level of the price. So that actually gives us a different, momentum. And that actually created another opportunity for we can change it. That is, our business model even. What about six commitments? Where are you going to prioritize your investment, you know, domestically versus here in America, not just with the proceeds from from this U.S. share sale, but but generally with your balance sheet generally, outside of the dynamics and the most important matter as I data center business. So we announced that, almost at the trillion, investment and next ten years, the to set up with the, I data center is my target is about, 15 gigawatt to in Korea.

13:34 But, I guess that the five gigawatt then outside of Korea. So I'm looking for that this, Whatever area, including us side and, yeah. If there is a, yeah. Good chance. And to that, the problem is that the one main thing is a power. So, you know, power and the price of the, the, the electric City as well. That's a very important matter with that, the data centers. But once we build that, the that I data centers and then well, you can actually synergy between that the memory chip and this infrastructure matter. That's that's what I'm doing.

14:11 And in a feature we live on Bloomberg Television and on Bloomberg Radio. And this is Bloomberg Tech. In conversation with SK Group Chairman Chey Tae-won, he talks about the data center, the issues of the data center. This is an SK Group approach. Yes. So you're talking about the state group looking more broadly at the AI stack, not just memory. Yes. Where else will you focus your attention? well. a company like SK Telecom and, well, they are doing that. They, study, you know, the or the, printers, their resources or their own LM also their applications and, physical eyesight.

14:55 Yes. Robotics. Yes. And the health care side. Well, there is a well, there's a bunch of, opportunities. And the one we've been actually trying to, pursuing that the will, all those business opportunities in a future, an issue here in America and in Korea is talent. Mhm. There is a deficit of skilled workers in the chip industry in America. And a company like micron knows that there is a lot of talented people in Korea.

15:27 How are you going to manage that. And again your investment plans for here in the USA. Well to secure that bring that more talent. of ADHD is one thing, one, good, one option. Yeah, options. And the one that I give us all set the was some some kind of financial play options. Like why even the stock option then. Well, we could actually, using that the, the ADR, dragon. Right. So, it actually attracted a lot of people's, a lot of talent to the, to, to our group.

16:01 See, the ADR is, is also about public perception of SK, right. That's that's another, things. And the perception is matter so. Well, well so. Well. We have to spend that a huge money on the recording. a lot of, good talent and I'm, I don't really care about that. The, the talent is, it could be that the way us. Japan. Well, they wouldn't be good say. Yeah. It's everywhere.

16:31 So I try to recruiting that, much more of the talent. And that's the kind of important things. and I'm asking that I will see you as to what your job is to secure that talent in the future. So let's just set that doing and, well, we're going to you're going to create that a lot of jobs and. Well, I will and I would say that, my, several trillion dollar investment plan for, in a future. So we need a lot of talent, right? Chairman Jay, what is the biggest technological advantage the SRC has built him? Or on the memory side or memory side?

17:09 Okay. Process design. I guess that, well, can I just does the same? Just one things. But, what's the most important thing? Well, one thing. So Hynix, while I really focused on the, we could bring that to just one company, one thing. So, this is a simple business model and memory manufacturing. So. Well, we can actually emphasizing that, we are just one thing.

17:39 And so I think that the one thing made it that we are really one big historical achievement now. So, that's what I'm saying. And that's the most important matter. Yeah. You can say that the wall at some, Well, what design capacities and this process technology. This is right. But Tesla will working with TSMC on the base die, which the others do not do. Also. Well, we don't actually compete with at the, any customers. That's another to not compete with any customers. And you feel that's important.

18:10 Yes that's important. And that actually gives us a lot of room to enter in partnership in the future. So that's how we can actually maintain all those partnerships. Bigger picture. Can you catch up with Samsung? Oh, that's I don't want to answer those kind of question. So I don't. Well, my main goal is that the wall.

18:40 I have to make the, the our stakeholder happy. Yes. Well, not to that. there is a, well, certain party is a competition, but, I'm not really wanted to. Ahead of what? That's my main goal. You know what, though, chairman? Because the shareholders love the profit. Mhm. The customers want more capacity. More supply. Those seem to be competing ideals. That's what we call that the stakeholder. So, it's not only the shareholders so shareholder the ones that there are great returns here. Right.

19:12 And the customer wants that, the cheap product and enough supply. So but well, I cannot just satisfy it every time, every, stakeholder. But while we had at the certain balance. So, you know, between that, stakeholder and, what I'm really see that. Well, I also have to make that to, my members and, members of the company. Well, they have to be the happy, so happy company make that the happy result. So that's a simple, I need to say, chairman J.

19:45 the ADR is one stakeholder, the U.S. investor, the Adas indicated to open 77 per ADR. Of course, the ideas were priced at 149. The memory market is also evolving. So while supply is tight, there's a there's a very broad look at other technologies. I'm very interested about squeeze. Hynix is approach to Nand and flash memory. And the role you see that technology playing going forward. Right.

20:15 So it's a different type of the memory storage. So Dram has it the their own functions. But that's the instant things and the like a what people you just remember that certain numbers and if you just, prepare that the exam, then, you had a good memory on of those certain numbers and the, certain pocket. But, you also need that a lot of other memories in the. When you was young then, you had that the some, some memories, but.

20:46 Well, that memory needs that the, not just that, in a brain. You probably saw that somewhere. but, like. Well, I need that the sit out of a storage. So Dram has at the, instant response and the instant, the response, the type of memories that usually is stored there. But if you had at the, more big size and, we call that the, quote data. So if it is a cold data, then, well, you could actually, store in the, Yeah.

21:22 Where, where? Sorry to interrupt. You can say, where is the innovation on that other side? Oh, There is a lot of technology, and the problem is that the world in an end, it actually well response is, well, need that a lot of, the time that means is a latency. So, in order to ensuring that the what that, the, the latency, well, we need that a lot of special technology on that and, well, probably well, what we call that the key be caching, the key value caching.

21:58 And, while that, the cache has to be stored in there somewhere. So that's the kind of, the pyramid, the hierarchy, of the what? The whole memory storage systems. And we need that, all those evolution of the world, those, the memory things. And SK will invest into that technology, of course, that the that's our domain business. And, well, we're going to we're going to make it and, we could actually, well, deliver some other the business model, even not just at the memory producers.

22:27 So we could actually memory services that the memory as a service. Oh well you know in a future that that is another area so where we could actually focus on. So talk a little bit more about memory as a service. Well the basics of how that would work. Well yeah. So right now it's the kind of imaginary things and the idea. Yeah. Yes. Just the idea. So but I think that the, our whole I, trend the direction is, goes there because that the memory is a kind of, real bottleneck and the we have to solve it. And some of the specialists actually bring that the, a certain type of solution to the, the issue customers and the easy application. So, it's not just that the well, one solution could actually cover that all those problem as it's not going to happen, but it's the inferencing market. And that inferencing market has that the their own the characteristic that characteristic.

23:21 And we we have to develop that the certain adjustment for that the stack up to the memories and how to do it. And the we need that some special software together. But anyhow would that well, we could actually serve as a kind of services rather than adjusted to here is the memory and you just use it. But, we just fix that the, all kind of different memory, the memory systems. So once we made it and we could actually deliver as a kind of service rather than just to, produce it, just a commodity.

23:55 It's an interesting look at the future. We are live on Bloomberg television and radio. Speaking to SK Group Chairman Chey Tae-won In October when you spoke to Bloomberg Shery Ahn, you said, everyone asks me about I bubble, I bubble, I bubble. And you said at the time, it's about the cost of eye. The cost of eye is too high. Yeah. Has that changed since October and what is the trajectory of the cost of I. Yeah. Well cost of I as well. You could actually saying that the, token for the dollar token per dollar or dollar per token basis.

24:32 Yeah. And, you know, the, we have to lower down that, the, the token cost. But do you see it coming? Yes, actually. Well, within a three years, actually, token cost is about one fifth of what, the one tenth. So that's, evolutions. And, well, there is a lot of, players just contribute that, those kind of, the token cost is so, way down. So even my memory company, I'll make the with some solution for the how, how we could actually lower down that, the token cost.

25:10 That's the our challenge. And the, our direction is goes there. So that's a kind of ecosystem for the AI. And, well, right now it's closest to high, but, somehow that, our technology, you know, down the road probably five your ten years. And the while we actually, all those problems and it could actually be that while, everybody say I and everybody could actually using that the day one the Asian in the future. So that's, that's, that's the direction I see.

25:39 But no, I bubble, I gobble. And when you see that the I bubble and that's real world and the, stock market stock market always that I see that the some, overshooting and well as a too hard too cold. So there might be it at the. Well, there is a lot of wobble for that. the stock price is up, but that does that doesn't actually reflect that the whole real world, but the trend wise is. So if it's a long run, then two years, three years down the road, then, you could actually, reflect that the old, real world, that's what I see. And, well, you can say that the I bubble, but, I see that the world, stock market.

26:22 But this AI technology is real. So you use it. You use it. And, well, actually, the problem is, well, this I, thing is that right now is a little, immature, the imperfect, yet it's the early stage. it's so early stage is a kind of, I said it. It's only four years old, baby, but, when you become a the. Well, some the college boy and something else, then, he has that the much more the mature.

26:52 So it could actually help us that a lot of productivity and yeah, we just rely on those things. And, this is a kind of race and that right now we see that the some, I tried to say it's a historic day, right? Literally, making history with the ideas, but the focus on America is relationship with America. What is your relationship like with the Trump administration, and how are you working with them to bring more of Sky next to to this country?

27:27 Well, not only just SK Hynix and the within already, the SK already investing at the more than $35 billion in US side. And not many people, noticed those things. But, we do have bio business. We do have, the battery business. And Hynix just, announced that the, new fab in the Indiana side and, also SK Telecom made it through a lot of, investment into the AA, startups. So we already invested in the, 35, but, I see that, well, my plan is that the much bigger number.

28:01 So, bigger than 35. Yeah. Well, a much, much, much bigger than, 35. So, I'm planning to and, this is, one milestone and the way that the, the U.S. capital market and, we have a lot of options. And also we had that the responsibility to keeping that, shell, to share price. And, well, there's one good thing is that we made it the right investment, and, so we kept it that own value. Mhm. China.

28:32 It's an important market. Oh. China driver of I know China I as well we have to actually notice that and the China approach is way different than the US side. How so. Mhm. They have a lot of this identity on a though I side. But anyhow that they put it into a lot of other resources. The number one is that the the human force. So human capital.

29:03 Yeah. Human capital. And, the number of people, the number of engineers. So, annually, while they had that stem, the student from that, the, the major in the Stem, and, it's more than the, the million, student has come out and every year. So they're looking for the jobs and, mostly they, apply to the, the, tech area. When you say take every, it's probably 50%, as I cite. So they are I as well as a yeah.

29:38 They using that the different stretch. So I don't see that the any any kind of the, result yet, but there is some science and they making that, some, the chip away and, they try to create that the word cheaper token. The token cost to compatibility. Yes. That's the kind of important matter. And the, the US focused on our, niche market and, well, the quality of tokens, but, China is a focus on, other ways, so I don't know the should, but, well, I see that the what if they using that the different strategic.