SK Chairman Choi Tae-won warns: AI is devouring everything, and this year's profits of 100 billion dollars may instantly turn into huge losses

SK Group Chairman Choi Tae-won warned that the market's optimistic expectation that SK Hynix's operating profit could exceed $100 billion this year could also translate into a $100 billion loss. He emphasized that artificial intelligence is consuming everything during its transformation period, and the volatility brought about by technological change has reached unprecedented levels.

Speaking at the "Trans-Pacific Dialogue" event in Washington, D.C. on the 20th, Choi Tae-won stated that the uncertainty of the AI era has rendered traditional planning cycles meaningless, saying, "A one-year plan is meaningless; the changes between the beginning and the end of the year are too great." He pointed out that companies with capital and resources will dominate the AI competition, but even industry leaders find it difficult to determine whether they have the right solutions.

This statement highlights the double-edged sword dilemma faced by the semiconductor industry amid the AI wave. Although SK Hynix achieved its best-ever performance last year due to a surge in demand for high-bandwidth memory, with its market value soaring to 690 trillion won, Choi Tae-won's warning reveals the risk that accelerated technological iteration could instantly change the market landscape, posing a significant challenge to the semiconductor industry, which relies on long-cycle investments.

Choi Tae-won also emphasized that the energy demand of AI data centers is becoming a challenge for society as a whole, with the infrastructure for AI data centers in the U.S. alone requiring an investment of $5 trillion. He stated that the cooperation among South Korea, the U.S., and Japan at this turning point will determine the future order.

Profit Expectations Doubled from $50 Billion to $100 Billion

SK Hynix's performance expectations have changed dramatically in just a few months. Choi Tae-won revealed that in December last year, the market predicted that this year's operating profit would exceed $50 billion, while the latest expectation has surpassed $100 billion. This figure is equivalent to approximately 144.85 trillion won.

This surge in expectations is based on SK Hynix's strong performance last year. The company is projected to achieve sales of approximately 79 trillion won and an operating profit of 47 trillion won in 2024, setting a historical record. The growth in demand for high-bandwidth memory and strong sales of general DRAM are the main driving factors, with the company's market value and that of Samsung Electronics jointly pushing the Korean KOSPI index into the 5000-point era.

However, Choi Tae-won remains highly vigilant about this seemingly favorable expectation. He stated, "New technology may be a solution, but it may also render everything void," emphasizing that even the most advanced technological advantages may be quickly lost amid the industrial upheaval triggered by AI.

Market Distortion Phenomenon

Choi Tae-won pointed out that the construction of AI infrastructure is causing structural distortions in the semiconductor market. He stated that the company needs to manufacture "monster chips" like HBM that use the most advanced technology, as these products can bring in substantial profits.

However, abnormal phenomena are emerging in the market. Due to the massive consumption of memory supply by AI infrastructure, the profit margins of general memory have surpassed those of the more technologically advanced HBM products. Choi Tae-won referred to this phenomenon as "distortion," reflecting that the impact of AI demand on the entire semiconductor supply chain has exceeded normal market rules.

This distortion highlights the strategic dilemma faced by semiconductor companies: on one hand, they need to continuously invest in R&D for cutting-edge technology, while on the other hand, the rapid changes in market structure may make the value of technological advantages difficult to predict

Energy Bottlenecks Become the Biggest Challenge for AI Development

Choi Tae-won views energy supply as one of the most severe challenges in the AI era. He stated, "AI is actually consuming almost all the energy and electricity we need," and if power demand is not properly addressed, it will become a huge challenge for society as a whole.

Specific data illustrates the seriousness of the problem. Choi Tae-won revealed that building a data center requires about $50 billion, and the demand for AI data center capacity in the United States is approximately 100 gigawatts, with infrastructure investment alone needing $5 trillion, not including energy costs.

He admitted, "I'm not sure if we have a solution," and noted that the current situation has turned into a necessity to match each data center with a 1-gigawatt power station. This tight coupling of energy and computing power requirements far exceeds the planning capabilities of traditional industries.

SK Prepares Integrated Solutions for Data Centers and Power Stations

In the face of energy challenges, Choi Tae-won revealed that SK is preparing a new solution to build AI data centers and power stations together. He stated that even if data centers are built, there are many technologies in the future that can make them more efficient, and the company will concentrate resources on research and development to enhance competitiveness.

This strategy aligns with the energy infrastructure development direction emphasized by the Trump administration. When asked about investment plans in the energy sector in the U.S., Choi Tae-won said, "We've been doing it for a while," but emphasized that changes in AI occur on a monthly basis, while energy projects typically require a five-year cycle, creating a serious mismatch in pace.

Regarding the U.S. Supreme Court's ruling that Trump's mutual tariffs are illegal, Choi Tae-won stated that he would need to review the judgment before making further comments.

Cooperation Among South Korea, the U.S., and Japan Will Determine Future Order

Choi Tae-won emphasized that the current transformation is not a simple challenge but a structural reality that determines the survival of everyone. The forum, which started in 2021, brings together current and former senior officials, scholars, think tank members, and business people from South Korea, the U.S., and Japan to discuss international issues.

He stated that how South Korea, the U.S., and Japan cooperate at this turning point will determine the future order. This statement reflects the rising importance of technological alliances and supply chain collaboration in the context of increasingly fierce competition in the AI and semiconductor industries.

Choi Tae-won's warning provides the market with a sobering perspective: despite the enormous opportunities presented by AI, the speed of technological iteration, market volatility, and infrastructure bottlenecks mean that even industry leaders face unprecedented uncertainty