SK Chairman Chey Tae-won warns: AI is devouring everything, this year's tens of billions in profits could instantly turn into massive losses.

SK Group Chairman Chey Tae-won warned that the market’s optimistic expectation that SK Hynix's operating profit this year might exceed $100 billion could just as easily turn into a $100 billion loss. He emphasized that artificial intelligence is devouring everything during a period of transformation, and the volatility brought by technological change has reached unprecedented levels.

On the 20th, Chey Tae-won attended the "Trans-Pacific Dialogue" event in Washington, D.C., and said the uncertainty of the AI era has rendered traditional planning cycles meaningless: "Even a one-year plan is meaningless, as the changes from the beginning to the end of the year are too dramatic." He noted that companies with capital and resources will dominate the AI competition, but even industry leaders can hardly determine whether they hold the right solutions.

This statement highlights the double-edged sword dilemma faced by the semiconductor industry under the AI wave. Although SK Hynix achieved historic best results last year due to a surge in demand for high-bandwidth memory and its market value soared to 690 trillion Korean won, Chey Tae-won's warning reveals the risk that accelerated technological iteration could instantly change the market landscape, posing a significant challenge for the semiconductor industry, which relies on long-term cycles of investment.

Chey Tae-won also stressed that the energy demand of AI data centers is becoming a challenge for all of society, with infrastructure for US AI data centers alone requiring $5 trillion in investment. He said that the manner in which South Korea, the US, and Japan cooperate at this critical juncture will determine the future order.

Profit expectation doubled from $50 billion to $100 billion

SK Hynix's performance expectations have changed dramatically in just a few months. Chey Tae-won revealed that last December, the market forecast for this year's operating profit was over $50 billion, but the latest expectation has exceeded $100 billion; this is equivalent to about 144.85 trillion Korean won.

This surge is built on SK Hynix's strong performance last year. The company achieved sales of about 79 trillion Korean won in 2024, with an operating profit of 47 trillion Korean won, setting a historical record. Growth in high-bandwidth memory demand and strong general DRAM sales were the key driving forces, with the company's market value and Samsung Electronics jointly driving South Korea's KOSPI index into the 5000-point era.

But Chey Tae-won remains highly cautious about these seemingly positive expectations. He said, "New technology may be a solution, but it could also turn everything into nothing," emphasizing that even the most advanced technological advantage could quickly be lost amid the dramatic industrial shifts triggered by AI.

Market "distortion" phenomenon emerges

Chey Tae-won pointed out that AI infrastructure construction is causing structural distortions in the semiconductor market. He said that companies need to manufacture "monster chips" such as HBM using the most advanced technology, and these products can bring real huge profits.

Yet abnormal phenomena are appearing in the market. Since AI infrastructure is devouring a large portion of memory supply, the profit margin of general memory products is actually higher than that of the more technically advanced HBM chips. Chey Tae-won called this phenomenon "distortion," reflecting how AI demand has impacted the entire semiconductor supply chain beyond normal market rules.

This distortion underscores the strategic dilemma faced by semiconductor companies: on the one hand, they must keep investing in developing cutting-edge technology; on the other hand, rapid changes to market structures may make it hard to predict the value of technological advantages.

Energy bottleneck becomes the biggest challenge for AI development

Chey Tae-won regards energy supply as one of the most severe challenges of the AI era. He said, "AI is almost devouring all the energy and electricity we need," and if electricity demand is not properly addressed, it will become a huge challenge for society as a whole.

Specific data shows the seriousness of the problem. Chey Tae-won revealed that building a data center requires about $5 billion, and the US needs about 100 gigawatts of capacity for AI data centers, with infrastructure investment alone amounting to $5 trillion, not including energy costs.

He admitted, “I am not sure if we have a solution,” and said that current circumstances mean that each data center must now be matched with a 1-gigawatt power plant. This tight linkage between energy and computing power far exceeds the capabilities of traditional industrial planning.

SK prepares integrated data center and power plant solution

In the face of energy challenges, Chey Tae-won revealed that SK is preparing a new solution to build AI data centers and power plants together. He said that even after building data centers, many technologies can make them more efficient in future, and the company will focus resources on research and development to improve competitiveness.

This strategy is consistent with the Trump administration’s focus on building energy infrastructure. When asked about US investment plans in the energy sector, Chey Tae-won said "we have always been working on it," but emphasized that changes in AI happen over several months, while energy projects usually require a five-year cycle, and the two rhythms are seriously mismatched.

On the US federal Supreme Court ruling that Trump’s reciprocal tariff imposition was illegal, Chey Tae-won said he needed to review the judgement before commenting.

South Korea-US-Japan cooperation will decide future order

Chey Tae-won emphasized that the current transformation is not a simple challenge, but a structural reality determining the survival of everyone. Since 2021, the forum has gathered current and former senior officials, scholars, think tanks, and business people from South Korea, the US, and Japan to discuss international issues.

He stated that at this turning point, how South Korea, the US, and Japan cooperate will determine the future order. This reflects that under intensifying competition in AI and the semiconductor industry, the importance of technological alliances and supply chain collaboration is rising.

Chey Tae-won's warning provides the market with a sober perspective: despite the huge opportunities brought by AI, the speed of technological iteration, market volatility, and infrastructure bottlenecks mean even industry leaders face unprecedented uncertainty.

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