SK Group Chairman Chey Tae-won celebrates 25 years of leadership

SK Group Chairman Chey Tae-won. [Courtesy of KCCI]

SK Group Chairman Chey Tae-won, who celebrates 25 years of leadership on September 1, is applauded for his achievements of transforming the conglomerate into the country’s second-largest business group engaged in a diverse range of sectors from energy to battery, bio, and chips.

According to industry sources and data from the Fair Trade Commission on Monday, SK Group’s total assets reached about 327.3 trillion won ($247.6 billion) in May, a tenfold increase from about 32.8 trillion won 25 years ago.

The conglomerate climbed to No. 2 after Samsung Group in May 2022, up from No. 5 in domestic ranking.

SK Group’s sales rose to 224.2 trillion won last year from 32.4 trillion won, marking a sixfold increase, and operating profit to 18.8 trillion won from 2 trillion won, a ninefold increase, during the cited period.

SK Group exported 83.4 trillion won worth of goods, up from 8.3 trillion won. The conglomerate accounted for roughly 10 percent of Korea’s entire exports last year, which amounted to about 887 trillion won.

Since the early days of his tenure, Chey has been focused on reshaping SK Group’s structure through strategies such as exploring overseas markets and driving exports. His efforts allowed SK Group to turn into a global enterprise with an expanded business domain.

Under his leadership, the group witnessed qualitative growth by prioritizing new growth engines, including batteries, bio-technology, chips, and hydrogen.

The shift in the group’s business portfolio toward new growth engines began with the acquisition of Hynix Semiconductor in 2012.

Recognizing that relying solely on its origins, such as energy, chemicals, and information communication technology, may impede sustained growth and development, Chey was determined to pursue the Hynix Semiconductor acquisition despite internal opposition.

Even during industry downturns, SK Group increased investments in chips and went on to acquire Kioxia, Intel Corp.’s NAND memory business unit, OCI Materials, and LG Siltron. This achievement led to vertical integration in the semiconductor industry and established the group as a global leading chipmaker.

The battery business, another core growth engine for SK Group, is also seeing rapid expansion.

[Courtesy of SK on]

SK on Co., a company specializing in batteries for electric vehicles, has established production bases in North America, Europe, and China, solidifying a crucial position in the global battery supply chain.

The company’s battery production capacity reached 88 gigawatt-hours (GWh) by the end of last year, signifying a 50-fold increase in just five years from 1.7 GWh in 2017.

With two factories in Georgia, U.S., SK on established a joint venture named BlueOval SK LLC with Ford Motor in July last year to build three more in the U.S.

In Europe, it operates the first and second factories in Komárom, Hungary, along with the third factory in Ivancsa. In China, its facilities are in operation in Changzhou, Huzhou, and Yancheng.

SK Group is also steadily advancing in the field of clean energy.

In 2021, the group’s holding company SK Inc. and energy arm SK E&S Co. acquired a 9.9 percent stake in Plug Power Inc., a U.S. company with core hydrogen technology. In August 2022, SK and SK innovation Co. invested 320 billion won in TerraPower LLC, a small modular reactor company founded by Microsoft Corp. co-founder Bill Gates.

SK Group is also actively pursuing growth opportunities in the biotechnology sector.

SK chemicals Co. developed the first domestically-produced anticancer drug, Sunpla, in 1999. SK biopharmaceuticals Co. achieved numerous milestones in new drug development, including independently developing the antiepileptic drug Xcopri in 2015.

To expand its contract development and manufacturing organization (CDMO) business for pharmaceuticals, SK acquired Bristol Myers Squibb Co.’s Ireland factory in 2017, and the U.S. CDMO company Ampac Fine Chemicals LLC in the following year.

In 2019, the group integrated its U.S., European, and Korean production corporations, with the establishment of SK pharmteco. In 2021, it further acquired the French CDMO Yposkesi, making a significant entry into the cell and gene therapy sector.

However, the process of significant investments in new areas has led to increased financial burdens due to substantial external financing and challenges like geopolitical risks. The performance of core sectors like energy and chips has also deteriorated. These are the current challenges that SK Group and Chairman Chey face.

According to a recent analysis of SK Group by Korea Ratings, the operational performance of the group’s core affiliates was weak last year amid continued external financing for operating funds and facility investment, leading to increased borrowing burdens. The analysis showed that the group needs an active financial strategy to curb the growing debt pressures.