Taking a daring step toward fortifying the supply chain that is central to the Global Chip Industry, SK Square Co. and SK Hynix Inc. have partnered up with Shinhan Financial Group and LIG Nex1 Co. This collaborative effort aims to reinforce the worldwide chip component and equipment supply chain through the rollout of a $77 million investment fund.
Referred to as TGC Square, this fund was set up by SK Square, the investment management division of SK Group. The nature of the fund is open-ended, thus leaving room for potential partners to join the venture at a subsequent stage.
The inaugural investment destination for the fund is Japan, an acclaimed hub for high-end tech firms. SK Square intends to pump approximately 60% of the fund into Japanese businesses, aiming to foster cooperation with SK Hynix, the second-largest memory chip producer worldwide. Post Japan, the fund aims to extend its reach to the US and other countries, specifically targeting smaller businesses possessing superior technical skills within the microchip materials, parts, and equipment sector.
The establishment of the fund aligns with an emerging worldwide inclination to reinforce supply chains, particularly within the tech industry. This shift has been propelled partially by a surge in resource nationalism, as nations globally strive to secure their supply chains against escalating global rivalry and uncertainty.
Taking the helm of TGC Square as CEO will be Choi Woo-sung, who currently oversees chip sector investment at SK Square and leads the Japan office of SK Telecom Co. SK Square has also onboarded Cho Hee-joon, former head of BNP Paribas Japan, to serve as the fund’s chief investment officer, and Yasuteru Miyamoto, ex-vice president of Credit Suisse, to lead investment screening.
The spokesperson for SK Square noted the fund would keep a vigilant eye on a range of possible investment targets, with a semiconductor inspection equipment maker, an eco-friendly chip part manufacturer, an AI chip developer, and a next-generation chip materials developer among them.
This move aligns with the Japanese government’s drive to draw foreign investment into its chip sector. Through a combination of subsidies and incentives, Tokyo has succeeded in attracting some 2 trillion yen in investment from industry giants like Taiwan Semiconductor Manufacturing Company (TSMC) and US chipmaker Micron Technology Inc. Notably, foreign investment in Japanese chip startups has surged fivefold over the past eight years.
Once investments have been completed, SK Square and SK Hynix aim to utilize various strategies to enhance the corporate value of these companies. Such strategies encompass providing tech support and aiding companies with future share sales via initial public offerings (IPOs).
SK Square, having been separated from SK Telecom, Korea’s leading mobile carrier, in 2021, now operates as an intermediate holding company within the SK Group. It handles around 20 portfolio companies and actively pursues fresh investment possibilities in non-telecom sectors. Notably, it recently exited its joint venture with Grab Holdings Ltd., offloading its entire stake in the Southeast Asian ride-hailing startup.
Adhering to its assertive investment approach, SK Square has been pouring resources into promising areas like the metaverse, agricultural technology, and cryptocurrency. With the roll-out of this new fund, SK Square and SK Hynix are setting themselves up as pioneers within the global chip industry.
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