SK's 'Square' spin-off targets semiconductor M&A

SK Telecom has named its planned spin-off company SK Square and provided some additional detail on the new venture, chief among which is its intention to invest heavily in the semiconductor space.

The South Korean telco announced plans to separate out its semiconductor and new ICT – in areas such as media, security and commerce – businesses in April, at the time referring to the new entity as ‘ICT Investment Company.’

It has now moved on from this working title and revealed that the firm will be known as SK Square, a name that it claims “embodies the company’s vision to become a global investment company specialized in ICT by making aggressive investments in areas ranging from semiconductor to future technology.”

It also shared that the spin-off is due to take place on 1 November, following its – presumed – approval at its shareholder AGM three weeks earlier.

The aforementioned aggressive investments will enable SK Square to expand to a net asset value of 75 trillion won (US$64 billion) by 2025, SK Telecom said, which represents a three-fold increase on its current value.

SK Telecom, which will continue to house the group’s telco assets, or, in its own words, its AI and digital infrastructure businesses, will retain its current brand, incidentally. As with its previous announcement, SK Telecom did not refer specifically to its sizeable mobile and broadband operations, which tells us something about its current mindset.

But back to SK Square. The company used the term “aggressive investments” once again to describe its strategy for the semiconductor sector, which will include seeking out mergers and acquisitions to generate synergies with chip maker SK Hynix.

Its semiconductor ambitions are broader than its own company though. SK reiterated its support for what has been termed the K-Semiconductor Belt, a South Korean initiative to boost its presence on the global semiconductor stage through public-private cooperation. The South Korean government recently announced new tax breaks for the semiconductor space and all the big guns are getting involved; companies will make investments totalling 510 trillion won through 2030, according to a government survey of more than 150 companies, including KRW171 trillion committed by Samsung, as Seoul looks to take on Taiwan’s semiconductor dominance.

With a well-documented global semiconductor shortage in full swing, South Korea is not the only major economy concentrating on that market – the European Union recently revealed that it aims to produce 20% of the world’s semiconductors by the end of the decade, for example – but it is one of those with the strongest presence to date. And SK Square is clearly keen to snap up its share of the action going forward.

Meanwhile, the new ICT side of the business will focus on the app market, through SK’s One Store venture; the commerce space, where SK operates through its 11st1^st shopping Website; converged security, via Korean security systems company ADT Caps, acquired by SK a couple of years ago; and mobility…although the last refers not to the telco’s mobile operations, but to its T Map Mobility navigation platform. SK Square is charged with accelerating growth across these areas through both investment and international partnerships. It has also earmarked the likes of quantum cryptography, digital healthcare and media content as areas of investment in future.

Interestingly – or bafflingly, depending on your point of view – SK Telecom’s chief executive Park Jung-ho will also be appointed as CEO of SK Square at October’s AGM, a move that seems to rather defeat the purpose of splitting the unit out in the first place.