Lately, the business community has been focused on the future of Choi Chang-won, chair of the SK SUPEX Council. As SK Group moves to expand its businesses centered on SK hynix, some are analyzing that Choi's role, which had focused on improving the group's financial structure, may have run its course. Adding to this is the view that he could step down as chair and return to focus on his main business, given the weak performance of SK Gas, the flagship affiliate of SK discovery, which he manages.
According to the business community on the 24th, some within SK Group recently floated a "fall reshuffle" rumor for the SK SUPEX Council chair. The view was that as early as September, Choi would step down and a new chair would be appointed from among those considered close to his cousin, SK Group Chairman Chey Tae-won. However, the prevailing view now is that Choi will continue to lead the SK SUPEX Council through the end of this year or early next year.
Choi was appointed to a two-year term as chair of the SK SUPEX Council in December 2023 as a "relief pitcher" for SK Group, which was struggling due to weak performance at key affiliates. Had the original schedule held, his term should have ended late last year, but he has continued to serve as chair without a separate renewal process.
When Choi took the helm of the SK SUPEX Council, SK Group was suffering from poor results at its main affiliates. SK hynix was accumulating large losses amid a slump in the memory market, and SK On, the battery maker, saw profitability deteriorate due to an electric-vehicle chasm (a temporary demand slowdown), increasing the group's overall financial burden.
From the outset, Choi led an organization-wide Operation Improvement (OI) push to overhaul the group's fundamentals. He reorganized the group's core business structure by, among other steps, merging SK Innovation and SK E&S and selling a string of affiliates and businesses. He also implemented stringent self-help measures, such as requiring executives to fly economy class on overseas trips and cutting business expenses, to trim excess.
The group's management stance, previously focused on improving its financial structure, began to change in the second half of last year. With the expansion of the artificial intelligence (AI) market, SK hynix's revenue surged, shifting the stance from austerity to expansion.
Recently, SK Group has been expanding investment to secure an early lead in the AI market. On June 29, Chairman Chey said, in connection with the government's three mega projects, "We will invest about 1,000 trillion won in the AI data center project by 2035."
SK Telecom is leading the construction of AI data centers, with SK Innovation handling energy procurement and SK ecoplant in charge of construction, among other affiliates participating. Naturally, the role of the SK SUPEX Council, which handles group decision-making, is crucial.
SK hynix is also pursuing ways to expand beyond being a company that sells chips like High Bandwidth Memory (HBM) and high-capacity server DRAM, aiming to become a key player leading the global AI market. Chairman Chey Tae-won, in an interview in the U.S. right after SK hynix's listing on the Nasdaq last month, also expressed his intention to build AI data centers in the U.S. and invest in venture creation and research and development (R&D) centers.
Accordingly, within the group, there is a view that a new person who can swiftly execute Chairman Chey's push for business expansion on the ground will be appointed to replace Chair Choi, who led the overhaul through austerity.
In fact, leadership reshuffling has begun, with Yoon Poong-young, president of the SK SUPEX Council who has led initiatives such as AI transformation (AX) at SK Group, recently appointed head of SK hynix's Global Listing Task Force (TF).
Within the group, some cite the sale of SK Siltron as the backdrop for the recent rise of rumors about replacing Choi. SK Siltron, the world's No. 1 semiconductor wafer maker, was recently sold to Doosan Group. While Choi, who has been driving structural reform, strongly pushed for the sale of SK Siltron, Chairman Chey Tae-won was said to have opposed selling SK Siltron, which has world-class competitiveness in wafer production.
At the end of last year, Doosan Group was selected as the preferred bidder for SK Siltron, but the final sale decision, following a board resolution, was not confirmed until the 31st of last month, seven months later. This led some to interpret the delay as stemming from differing views between Chairman Chey and Chair Choi over the sale of SK Siltron.
Another reason the rumors of Choi's replacement are gaining traction is that SK discovery, Choi's main business, has not shown improvement as markedly as SK Group. SK discovery is a holding company with affiliates including SK Gas, SK Chemicals, and SK Plasma, and Choi is the largest shareholder with a 40.2% equity stake.
SK Gas, the flagship affiliate, recorded an operating loss of 43.9 billion won in the second quarter, swinging to a loss from a year earlier. This was because derivative valuation gains booked in the first quarter were reflected as losses in the second quarter. Failure to promptly reflect liquefied petroleum gas (LPG) price adjustment factors is also seen as having hurt profitability. Accordingly, first-half operating profit fell 21.3% to 183.7 billion won from the same period last year.
In contrast to SK Gas, SK Innovation, SK Group's energy affiliate, showed a marked improvement. SK Innovation posted second-quarter revenue of 29.1572 trillion won, up 49.9% from a year earlier, and turned to an operating profit of 3.4873 trillion won. While the refining segment continued to improve, profits surged at SK Enmove, the lubricant subsidiary, and at SK On, the battery business.
A business community source said, "Over the past three years, as Chair Choi focused on groupwide restructuring, SK discovery affiliates, including SK Gas, drew frequent criticism for experiencing an owner leadership vacuum." The person added, "Given Chairman Chey Tae-won's firm desire to expand in the AI market, by the end of this year there will again be growing calls for a new figure with expertise and drive in new businesses and new investments."