It is reported that South Korea's SK Group is fully promoting a large-scale restructuring activity, planning to release 80 trillion won for investment in AI by 2026.

In a recent meeting with the heads of major subsidiaries, SK Chairman Chey Tae-won emphasized that the group needs to streamline operations in response to market changes. "As we enter a new era of transformation, we must fundamentally change and prepare for the future," he said.

It is said that the group's goal is to achieve a free cash flow of KRW 30 trillion by 2027 and reduce the debt to equity ratio to 100% or lower.

Since its inception in the fiber optic industry in 1953, SK has grown into the largest family owned conglomerate in South Korea, second only to Samsung Group. Chey Tae-won is the third-generation leader of the group, expanding the company's total assets to 33.4 trillion Korean won through multiple acquisitions in the semiconductor and other fields.

But in recent years, SK's profitability has seriously declined. According to data released by the Korea Fair Trade Commission, SK Group's net profit decreased by 94% to around 600 billion Korean won in 2023, and sales also decreased by 10% to around 200 trillion Korean won. And among them, the sharp decline in profits is partly due to SK Group's aggressive acquisition strategy. As of December 2023, the number of affiliated companies has nearly doubled in the past decade, reaching 219.

Previously, SK Group had given its subsidiaries considerable operational autonomy and entrusted them with maximizing profits as much as possible, but this approach gradually led to personnel redundancy and an increase in unprofitable businesses. As a response, SK Group has been selling its car rental, home appliance, and food delivery businesses since early 2024. Hanhua Investment Securities released data stating that the group plans to sell assets worth 4.6 trillion Korean won in the first half of the year, which is three times the amount for the entire year of 2023.

Now, SK Group is shifting its focus towards AI and energy. Semiconductor manufacturer SK Hynix is one of the fastest-growing divisions of the group, with the world's largest market share in the HBM field, which is a key technology for generative AI. The company achieved a historic high in sales in the first half of 2023.

Chey Tae-won believes that AI should be viewed as an industrial infrastructure rather than an isolated business. In order to promote communication between various AI related businesses within the group, SK Group established a team in March to strive for synergies between HBM and SK Telecom's data centers or SK Sillon's chip materials.

The group also collaborates with Japanese companies that have expertise in HBM critical equipment and materials. SK Hynix currently indirectly holds shares in Kioxia (formerly known as Toshiba Memory).

However, despite losses in the battery business, SK Group is still sticking to this business and focusing on potential demand related to electric vehicles and AI. It has also stated that it will continue to invest in areas it believes have future prospects.

As for the energy sector, SK Group plans to merge a department that deals with oil and batteries with another department that specializes in renewable energy. The resulting entity will have total assets of around 100 trillion Korean won and will become the "largest private energy company in the Asia Pacific region".

However, given SK Group's emphasis on independence in the past, promoting effective communication within the group may be a major challenge. The recent layoffs and business spin offs have raised concerns among group employees about their own situation and whether their business lines will face the next wave of "optimization".