South Korea's ruling party is moving to ease capital-raising rules for SK Hynix, clearing a path for the chipmaker to attract outside investors into its $268 billion fab expansion — a regulatory shift that could accelerate the country's AI semiconductor dominance.
South Korea's ruling party is seeking to make it easier for SK Hynix to set up ventures with outside investors to build semiconductor factories, a regulatory shift that would unlock capital for the chipmaker's $268 billion expansion as it races to meet AI-driven demand for high-bandwidth memory.
"Fast construction of fabs is needed to win against other major countries and companies," lawmakers from President Lee Jae Myung's Democratic Party of Korea said in a draft bill proposing amendments to the law on strategic industries with cutting-edge technologies. The current law forbids a subsidiary of a subsidiary — which is SK Hynix's corporate structure — from such capital-raising structures.
SK Hynix, which controls roughly 60% of the global HBM market by revenue, is a unit of SK Square, which is in turn a unit of SK Inc. The proposed amendment would allow the chipmaker to attract outside capital for new fabrication plants as long as it retains a stake of at least 50% in any such joint venture. Any new venture would also need to have its headquarters or main office outside the greater Seoul area, in line with government efforts to stimulate regional economies, the lawmakers said.
The regulatory push comes as SK Hynix and Samsung Electronics have pledged to invest 400 trillion won ($268 billion) each — a combined 800 trillion won ($517 billion) with their suppliers — to build two new semiconductor fabrication complexes in southwestern South Korea. SK Hynix raised $26.5 billion last week in a high-profile Nasdaq listing, the second-largest U.S. share sale ever, but the company is expected to need far more funds to finance its aggressive capacity expansion. SK Hynix CEO Kwak Noh-jung told Reuters on Friday that next year will be "the worst year in the industry's history from the supply perspective," as demand for HBM chips used in Nvidia's AI processors continues to outstrip supply.
Why the capital rules matter
SK Hynix's corporate structure — a subsidiary of a subsidiary within the sprawling SK Group chaebol — has historically limited its ability to raise equity from outside investors for specific projects. The proposed amendment directly addresses this constraint, allowing the chipmaker to create joint ventures where outside capital funds new fabrication plants while SK Hynix retains majority control.
The change is significant because SK Hynix's expansion needs are enormous relative to its current cash generation. The company reported 97.1 trillion won ($64.1 billion) in revenue in 2025 with a net profit margin of 44%, but its 400 trillion won investment pledge over the coming years far exceeds what internal cash flows can support. The U.S. listing and the proposed regulatory easing together give SK Hynix access to both American and Korean capital markets for its buildout.
Samsung Electronics, which operates under a different corporate structure with more direct control over its chip division, is not affected by the proposed amendment. The rule change primarily benefits SK Hynix, which has emerged as the dominant player in HBM — the specialized memory that sits inside almost every Nvidia AI processor and commands premium prices amid a severe shortage.
What it means for investors
The regulatory easing strengthens SK Hynix's ability to execute its capacity expansion without diluting existing shareholders through secondary offerings. If the amendment passes, outside investors — including sovereign wealth funds, pension funds, and strategic partners — could take minority stakes in specific fab projects, providing capital while SK Hynix retains operational control.
SK Hynix shares, which have surged more than 630% over the past 12 months and pushed the company's market value past $1 trillion, fell 8.6% on Tuesday as the initial euphoria surrounding its Nasdaq debut fades. The stock remains highly volatile: South Korea's KOSPI has triggered its circuit-breaker mechanism six times this year, with SK Hynix and Samsung together making up more than half of the index's total market capitalization.
South Korea's government is also exploring setting up a new investment vehicle backed by additional tax revenue from Samsung and SK Hynix's booming profits, aiming to spread the benefits of the AI boom across more of society. The Bank of Korea has warned that single-stock leveraged ETFs — which have swelled to more than $17 billion in assets for SK Hynix alone — risk deepening the market's already dangerous concentration in a handful of names.
This article is for informational purposes only and does not constitute investment advice.
