To Create Synergies with Affiliates
SK Group has invested 150 million yuan (25.6 billion won) in a semiconductor subsidiary of BYD, China's largest electric vehicle (EV) company. The investment is aimed at gaining a technological advantage in EV batteries, automotive semiconductors and autonomous vehicles in the global market as well as in China.
A total of 30 companies including SK China, Xiaomi, Lenovo, and BAIC Investment invested 800 million yuan to secure 7.84 percent of BYD Semiconductor shares on June 15. SK China invested 150 million yuan, the largest amount among the 30 investors, securing a 1.47 percent stake. BYD Semiconductor has raised 2.7 billion yuan through two rounds of investment.
BYD is seeking to transform BYD Semiconductor into a future mobility company. BYD has secured the No. 1 position in China's EV market and No. 2 position in China's EV battery market. Now, it is seeking to achieve a vertical integration of its operations from EV batteries to semiconductors and finished vehicles.
Industry insiders believe that BYD Semiconductor has strengths in electric vehicles and other electronic devices. BYD Semiconductor has already completed the development of SiC semiconductors that endure high temperatures. BYD Semiconductor is also mass-producing insulated-gate bipolar transistors (IGBTs), a high-performance semiconductor, and its market share in China stood at about 18 percent as of 2019.
SK Group hopes that its equity investment in BYD Semiconductor creates synergies with its affiliates, including SK Innovation, which is rapidly increasing its market share in the electric vehicle battery market, SK Hynix which is the world's second-largest DRAM manufacturer, and SK Telecom, Korea's number one mobile carrier.
SK Innovation plans to expand its market share in China's EV battery market through its plants in Changzhou and Yancheng, China, and SK Hynix needs to strengthen its position in China as the country accounts for more than 40 percent of its sales. SK Telecom is expected to cooperate with BYD because it is interested in self-driving cars based on 5G telecommunication and artificial intelligence (AI) technology. Above all, China is classified as a market that cannot be ignored by SK Group because it is the world's largest market accounting for about half of the global EV market.