Chey Tae-won says SK Hynix scouting fab sites worldwide: 'We must build wherever we can'

Chey Tae-won, chairman of the Korea Chamber of Commerce and Industry, said Wednesday that SK Hynix is reviewing potential sites for additional semiconductor fabrication plants around the world, including in the United States.

Speaking at a press briefing on the sidelines of the 49th KCCI Jeju Forum at Jeju Shilla Hotel, Chey — who also leads SK Group — said the company is compiling a global list of viable locations and ranking them by speed, scale and suitability. "We absolutely must find every place in the world where we can build right now, list them all, determine which is best, which can be done fastest and which allows the largest scale, set our priorities and build quickly," he said. "This has become something close to a lifeline for the semiconductor industry."

Chey said construction is needed not only in the Honam region but also in the United States. "We think we should build there too, if possible," he said. "There are issues to consider — power supply, trade pressure and various other factors."

Asked about US Commerce Secretary Howard Lutnick's pressure on Korean chipmakers to build more factories in the United States, Chey said Lutnick "has always been this way — I don't see anything unusual about this time." "He has been saying the same thing consistently since nearly the start of the Trump administration, and whenever he meets Korean companies, he asks, 'What are you going to invest in?'" Chey said.

He added that Lutnick delivered the same message at their very first meeting after Chey took the helm of the KCCI. "He asked how much we would invest in the United States and how much reshoring we would do," Chey said. "His focus and goals have always been the same."

On the outlook for semiconductor demand, including memory chips, Chey said demand is growing exponentially. "Demand next year is at least 60 to 100 percent higher than this year's — that is what we are hearing and being asked for," he said. "This is specific to the AI segment, but since AI now accounts for more than half of all semiconductor demand, overall demand will rise by at least 50 to 60 percent."

He said virtually no company is in a position to meaningfully increase supply next year, which means the gap between supply and demand will widen sharply. "That is why I am receiving enormous lobbying and pressure from all sides — it has reached what I would call a near-chaotic level," he said. "It is not just customer companies on the other side; governments are also involved, because securing semiconductors — memory chips in particular — has become a matter of economic security. Their own production lines depend on it, and this could keep escalating into quite a serious problem."

Chey said the South Korean government will likely begin feeling that pressure from foreign governments as well. "The survival of nearly every company now hinges on securing and producing memory chips," he said. "I understand their difficulties well, and I feel a strong need to do everything I can to increase supply."

He said expanding capacity as quickly as possible is the top priority, but speed alone is not enough. "Because the gap is so large, the scale also has to be enormous," he said. "That is why we are looking to build in every place we possibly can."

Chey said current global semiconductor prices are at an abnormal level and must be stabilized as soon as possible.

"Prices need to come down. It may sound strange, but current prices are abnormal," he said. "When prices are this high, sectors outside AI — PCs, mobile and others that cannot attract the same level of investment — are forced to keep raising their own prices."

Chey said this dynamic leads to what he called "chipflation" — cost pressure driven by rising semiconductor prices — and warned that if it persists, the industry will become a target. "That is why we need to increase supply and bring prices down," he said.

He acknowledged concerns that doing so would hurt margins, but argued the industry must think beyond short-term profit. "Even if margins fall somewhat, we need to grow supply, protect the market and expand it together — that is the only way South Korea's semiconductor industry can sustain itself and keep developing," he said. "If we keep pushing prices higher, the market will shrink and new entrants will inevitably come in."

Chey pointed to Elon Musk's stated interest in building semiconductor factories as a warning sign. "The reason Tesla's CEO is talking about entering chip manufacturing is not just because of their own demand — it is because at these margins, it makes more sense to do this than something else," he said. "That is not a good sign for us. You have to tend your land well and farm it carefully to keep harvesting from it. You cannot just extract everything at once and destroy the roots and seeds."

He said further price increases would also invite retaliation from other countries. "I am actually worried that prices will keep going up rather than coming down," Chey said.

Chey also addressed the bonus structure tied to "N percent of operating profit," a system widely credited to SK Hynix as its originator.

"Nobody anticipated the company would earn this much," he said. "The system was designed under those circumstances, and whenever you design a system, you can always end up facing unexpected situations. Navigating those situations wisely is what smart organizations do."

He said he expects SK Hynix's labor and management, along with all employees, to put their heads together and work through the issue. "As stated in SKMS — SK Group's management philosophy — one of the purposes of running a company is the happiness of its members, and if members are happy, I would like to give them as much happiness as possible," he said.

He added a caveat, however. "But there is a condition: I do not think anyone should pursue their own happiness at the expense of stakeholders'," he said. "If employees' happiness is genuinely harming or worsening the situation for stakeholders, then we are at a point where we need to step in and make changes to ensure happiness that is sustainable."

On the debate among government ministries over how to use the surge in tax revenue generated by the semiconductor industry's enormous profits, Chey said: "We pay a lot of taxes, and what the government does with that money is the government's business — I have no reason to weigh in on that."

Regarding allegations raised in political circles that the government pressured SK Hynix into choosing the Honam semiconductor cluster site, Chey said demand is exploding and the company needed to move quickly. "We needed to build fast, and we needed to start preparing the next phase after Yongin," he said. "The government determined that Honam is the place where power, water, talent and land are all ready to go, and I shared that expectation when the announcement was made."

Chey said that view has not changed. "Even now, my expectations are exactly the same, and at this point I have not been able to find another location in South Korea that meets these conditions as well," he said. "Ultimately, the government and local authorities have to build the infrastructure somewhere — and our thinking is simple: wherever the people with that authority do it well, we will build there."

Asked what sector could become the next bottleneck in the AI industry after memory chips, Chey said bottlenecks of varying sizes will keep emerging. "Didn't we not know, one or two years ago, that memory would end up like this?" he said. "Right now, energy is the next one coming in, and the electrical equipment that goes into that energy infrastructure has already moved into a shortage situation."

Chey said the stage after that will likely bring problems with materials. "The wiring that AI data centers consume, and the materials used to make that wiring — those will run out too," he said. "But every time a bottleneck appears, money flows into R&D and people find ways to work through it."

He said a bigger challenge lies beyond the bottlenecks themselves. "What comes after building AI data centers is the token economy — the economic structure that determines the cost and value of the tokens AI processes," he said. "The question is how cheaply you can produce tokens and what you can create with them. Ultimately, when we enter the 'next AI' era, what will matter is not how you build the data center but what work you do inside it and how you generate productivity."

On the 52-hour workweek rule, Chey said he would like to see greater respect for individual free will. "Employers are required to observe the 52-hour limit, but what do you do when an employee wants to work more?" he said. "If someone wants to work more for their own sense of achievement or personal reasons, there is a reason for it — preventing them wastes the system and wastes economic resources."

On government corporate policy, he said regulations from the high-growth era remain largely unchanged. "We have entered a low-growth period, yet the government talks about needing growth and tells companies to invest — but there are not many policies that actually help growing companies grow," he said. "If you want growth, you have to align the rules with growth. Small and medium-sized enterprises and mid-tier companies are all trying not to grow beyond their current size. If the signals are not there, who is going to try to grow?"

He also said South Korea runs on two axes — democracy and capitalism — but that people tend to forget about capitalism. "Democracy is a political system and capitalism is an economic system, but right now people only think about democracy, and that is causing serious problems," he said.

Chey added that for both wheels to function properly again, regulations must be aligned with growth. "Only when growth happens will there be room to solve the distribution problem," he said.

On the KCCI's response to a press release controversy that erupted earlier this year, Chey said the organization has reinforced its systems and carried out significant reforms. "Through extensive communication and dialogue with staff, the compliance issues that were at the root of the problem appear to have been largely resolved," he said. "However, we have not yet found a full-time vice chairman, so we are without a first mate, so to speak — I cannot say we are fully there yet, and I will update you again once that person is on board."

Chey was also asked about SK Hynix briefly topping the domestic stock market in market capitalization. "South Korea is too fixated on first and second place," he said. "Share prices go up and down. If the gap were so wide that no one could catch up, there might be something to say — but that is not the case, and we are still No. 2, so I feel nothing in particular."

On the possibility of a stock split for SK Hynix shares, he said it is not the most pressing issue at the moment. "I am not sure how the system works — whether the American depositary receipts listed in the US would also be split, or whether a filing would be required," he said. "I will look into the relevant policies and give it another review."

Asked, with his KCCI chairmanship set to end in March next year, what he found most rewarding and most regrettable, Chey said serving as APEC chair was the most meaningful experience. "On the other hand, I wish we had been able to bring the expo to Busan," he said. "What I considered most valuable was creating the Social Value Festa — bringing companies together to directly tackle social problems and collectively chart a direction."