The History of SK Hynix from 2001 to 2025 Unprecedented Underdog Myth of Korean Corporate History
Recently, SK Hynix, a domestic semiconductor company, has become a big topic. This is because the stock price is soaring day after day, and it is hitting an all-time high. The company’s market capitalization exceeded 256 trillion won. On top of that, there was even a report that each employee would receive 100 million won in incentives. These days, SK Hynix has become the number one company that all job seekers want to go to.
By the way, did you know that SK Hynix was close to bankruptcy even in 2001? The stock price once fell to 125 won, and there was even a nickname of ‘national coin stock’. It was around 2,600 won based on the current stock price, which took into account changes in the number of issued stocks. Compared to then, the stock price is now 135 times higher. What happened in the meantime? Today, let’s talk about the turbulent history of Hynix.
Hynix’s predecessor is Hyundai Electronics, which was founded in 1983. Considering that the former Geumseong Electronics (LG Electronics) was established in 1947 and Samsung Electronics in 1969, it is one of the latest electronics companies in Korea. In the early days, Hyundai Electronics was a company that makes various products from semiconductors to finished products like Samsung Electronics today. Companies such as Hyundai Curitel, which was later acquired by Pantech, and Heidis, which was acquired by Chinese display company Hisense, were all part of Hyundai Electronics. The IMF (International Monetary Fund) financial crisis in 1998 led to large-scale restructuring of each domestic industry. Among semiconductor companies, Hyundai Semiconductor and LG Semiconductor are subject to restructuring. Hyundai Semiconductor survives and acquires LG Semiconductor following the government’s ‘Big Deal’ work in 1998. At this time, Hyundai Electronics was on the verge of bankruptcy in 2000 due to the enormous debt it bore for the acquisition. In 2001, Hynix made 4 trillion won in sales, with a deficit of 5 trillion won and a debt of 7 trillion won. Hyundai Group, which was fragmented by the “Prince’s Rebellion” at the time, eventually withdrew from Hyundai Electronics’ management and launched “Hynix” in 2001, which is operated mainly by the board of directors. Hynix sells all major businesses other than semiconductors and seeks overseas buyers. The leading candidate for acquisition was US semiconductor company Micron. At that time, Samsung Electronics ranked first in the DRAM memory semiconductor market, Micron ranked second, and Hynix ranked third.
What if you sold Hynix to Micron then?
In April 2002, the management brought to the board a proposal to sell the company for about $4 billion and about 4 trillion won at the exchange rate at the time through negotiations with Micron. The board of directors votes this down. It is said that management, the board of directors, and the union have agreed to survive independently. In the end, Hynix’s creditors, banks, become shareholders through equity conversion.
Starting in 2002, Hynix will be led by Woo Eui-je, a former KEB CEO. Extreme cost cuts and manpower cuts have been made to survive, and Hynix has succeeded in converting to a surplus and has succeeded in graduating from the workout in just three years. It also overtakes Micron to rank second in global market share.
However, the fate of Hynix, which has neither technology nor investment capacity, has always been at stake. Since the late 2000s, Hynix has almost failed once again when the “second chicken game” has occurred, with DRAM prices falling by one-tenth. The stock price also dropped to 6,700 won. However, at every moment of the crisis, members were able to work together to overcome the difficulties. Nevertheless, the problem remained. I didn’t have enough money to make the investment I needed to survive in the semiconductor market.
In order to return the principal to the creditors and go to a normal governance structure, it was necessary to sell the creditors’ stake. The final candidates for acquisition were SK Group and STX Group in the sale that began in 2008. After many twists and turns, SK Group, which was an expert in M&A and PMI in 2012, will take over Hynix. At this time, SK Group’s acquisition of Hynix has several positive effects on Hynix.
Hynix’s fate changed due to SK Group acquisition
The first was the financial effect. At that time, SK Hynix’s acquirer was SK Telecom, the No. 1 mobile carrier with the best cash generation power in Korea. Thanks to this, SK Hynix’s credit rating goes up and its financing cost goes down. In addition, during the acquisition process, SK Group invested funds in SK Hynix through the acquisition of new shares worth 2.3 trillion won, which will allow the company to make active facility investments such as 4 trillion won in 2012 and 2 trillion won in 2013.
The second is corporate culture. As the owner changed from bank to SK Group, an internal engineer became the CEO (CEO) of SK Hynix for the first time. It’s Park Sung-wook, former vice chairman of SK Group. He is now considered to be the leader of SK Hynix’s engineer-centered corporate culture. It means that the ‘top team’ discussed technology development and investment fiercely with each other, and created a culture in which each department cooperated. The engineer-turned-CEO had the best understanding of technology, so he believed in a high-bandwidth memory (HBM) business that didn’t make money and continued to invest, and he was able to hold onto it when the opportunity came later.
Hyun Soon-yeop, former vice president of corporate culture at SK Hynix, who published a book titled “New Game,” about SK Hynix’s success story, said this.
The culture of trust and collaboration created by CEO Park Sung-wook was the key to SK Hynix’s leap forward. In today’s environment, collaboration is more important to success than internal competition.”
HBM Makes No. 1 in the World
HBM, a product that everyone who invests in stocks knows now. SK Hynix is the product that contributed the most to becoming the world’s No. 1 DRAM. Since HBM is five times higher than regular DRAM, SK Hynix, which monopolized 75% of HBM supplied to Nvidia, beat Samsung Electronics, which cannot supply it, to take the top spot in the DRAM market. However, it took no less than 10 years for this HBM to see the light, and it is no exaggeration to say that it is a product made with the blood and sweat of engineers.
HBM is the first product made worldwide by SK Hynix in 2013. AMD, a customer at the time, requested Hynix to stack DRAMs by stacking them, and Hynix will develop the world’s first product that had only a concept and deliver it to AMD. However, at that time, HBM was not used in AI (artificial intelligence) semiconductors as it is now, but was made for game graphics cards. As AMD’s gaming graphics card fails, HBM actually becomes a failed product.
To make matters worse, the initiative of HBM technology will be transferred to Samsung Electronics, not SK Hynix. When Hynix failed to supply the products demanded by Nvidia at the time, Samsung Electronics took all orders from Nvidia. At this time, the product equipped with Samsung Electronics’ HBM2 is Nvidia’s P100 GPU released in 2016. Nvidia has significantly accelerated AI learning by installing HBM2 instead of GDDR, which was previously used, and HBM will become a key component of AI semiconductors.
The Success of the Engineer’s ‘Blood and Sweat’
However, an unexpected opportunity comes to SK Hynix. In 2018, Samsung Electronics suddenly reduced its HBM team. At that time, as the No. 1 company stepped down from the business, there was skepticism about HBM even within SK Hynix. HBM was a nuisance-like product that consumed three times the wafer of a typical DRAM. Even if it was delivered to Nvidia, the expected market was also large.
However, SK Hynix, which was an engineer-focused organization, believed that HBM was essential for AI learning and would eventually create a big market. Above all, the idea of catching up with Samsung, the top player in a once-failed market, prevented the organization from shaking. In the end, SK Hynix succeeds in developing next-generation HBMs in line with Nvidia’s demands at the time and becomes Nvidia’s main supplier from HBM3.
Until the advent of ChatGPT in November 2022, neither Nvidia nor SK Hynix expected the AI semiconductor market to explode. When GPU orders for Nvidia began to flood in 2023, everything changed. SK Hynix, which was prepared early, was the only company that could meet the HBM production required by Nvidia. In the end, the efforts of engineers who have held out for 10 years with faith in technology were ultimately the secret to HBM’s success.
One of the hidden leaders of HBM Myth is Lee Jae-jin, who was the first HBM development design team leader. Not only did he lead the initial development, but he was also the one who presented the roadmap from the beginning that the MR-MUF process should be introduced in HBM manufacturing in the long term. Although the initial HBM failed, junior engineers continued to develop HBM and MR-MUF technology succeeded in developing it. The MR-MUF process, which has relatively low heat generation, is still an important competitive edge of SK Hynix HBM compared to Samsung Electronics and Micron.
From a rank-and-file employee to a CEO…Up to 23.3 billion won in stock options
Park Sung-wook, former CEO (Vice President) of SK Hynix, who is the first engineer-turned CEO of SK Hynix and created the current SK Hynix culture, deserves to be called the “myth of Korean engineers.” This is because even when the company he joined was in crisis, he did not leave the company and kept the company, and he became the CEO of this company and eventually opened the way to become the No. 1 in the world. The phrase “ugly trees protect the mountains” appears in the Chinese philosophy book Zhangjia. Handsome trees are cut down early, leaving the mountain, and ugly trees remain in the mountain for a long time.
Vice Chairman Park Sung-wook, who is from Pohang, North Gyeongsang Province, will join Hyundai Electronics in 1984 after graduating from KAIST with a master’s degree in materials engineering at Ulsan University. Although Hynix is in crisis, many talents have left the company, he quietly devotes himself to research and development to protect SK Hynix’s competitiveness. He has been doing R&D alone for more than 30 years while serving as the head of the Memory Research Institute and the head of the R&D manufacturing division.
Kim Jong-gap, former president of Hynix, said, “He is the world’s best expert in this field, making it impossible to talk about except for President Park Sung-wook regarding DRAM. I have a firm belief in what I believe. He also evaluated it as a leader with drive and thoroughness.
Kim Jin-guk, former CTO of SK Hynix, said, “After taking office, CEO Park Sung-wook computerized the SK Hynix technology roadmap and shared it within the organization,” and explained, “One of SK Hynix’s strengths is to build a sophisticated technology roadmap for the next 10 years.”
Discussion based on trust…Culture of Hynix
Vice Chairman Park was an introvert and quiet personality, but since becoming CEO, he has put a lot of effort into building corporate culture and fostering talent. It created a culture of SK Hynix that emphasizes current cooperation and discussion, and CEO Lee Seok-hee, who is the CEO of SK Hynix and is the CEO of SK On, was also recruited and joined by Vice Chairman Park while working as a professor at KAIST.
Vice Chairman Park is now known to have contributed to the creation of the Nvidia-TSMC-SK Hynix Triangular Alliance. He was so close to Morris Chang that he took a fab tour under the guidance of TSMC founder Maurice Chang.
Vice Chairman Park was highly evaluated during his tenure as CEO, but now that SK Hynix has become the world’s No. 1 DRAM, his evaluation is going up further. Since leaving office, SK Hynix’s stock price has risen, and Vice Chairman Park has become an unexpected wage earner. This has created a case of being an engineer and being successful in a large company without starting a business can receive great financial rewards.
Vice Chairman Park exercised about 290,000 stock options granted in March 2017 for three years and received 23.3 billion won in compensation alone. According to the Financial Supervisory Service’s electronic disclosure, Vice Chairman Park received about 54 billion won in compensation while serving as CEO of SK Hynix and ICT chairman of the SK Supex Pursuit Council.
[Reporter Lee Deok-ju]