Taiwan's Foxconn has announced plans to sell its entire stake in SK Inc., the holding company of South Korea's SK Group, after holding it for nearly 12 years.
This move is essentially a well-timed decision to cash in on a massive investment gain. Foxconn originally bought the shares in 2014, and thanks to a recent surge in SK Inc.'s stock price, the value of its stake has grown by about 174%. This translates to a profit of roughly ₩664 billion (around $480 million) from an initial investment of ₩381 billion.
So, what caused this dramatic rise in value? The story is deeply connected to the global AI boom. First, SK hynix, a key company within the SK Group, has become a dominant player in the market for HBM (High Bandwidth Memory), a crucial component for AI chips. As demand for AI technology soared, SK hynix's performance and stock price shot up.
Second, because SK Inc. is the holding company for the group, the success of major affiliates like SK hynix directly boosts its own value. Investors see the potential in SK hynix and, by extension, in its parent company. This positive sentiment, combined with SK Inc.'s own efforts to increase shareholder returns, created the perfect 'exit window' for Foxconn to sell its shares at a high price.
There's another side to this story: Foxconn's own strategic goals. Foxconn is aggressively expanding its business into AI infrastructure, such as building AI servers and data centers. This requires significant capital. By selling its SK Inc. shares, Foxconn secures nearly ₩1 trillion in cash, which can be immediately reinvested into its own high-growth AI projects. It's a strategic move to reallocate capital from a successful passive investment into its core future business.
Given the large size of the stake (about 4.5% of SK Inc.), the sale will likely be executed as a block trade—a private sale of a large number of shares to institutional investors, usually at a slight discount. This method helps minimize the impact on the public market price. While it might cause a temporary dip in SK Inc.'s stock, the removal of a large seller could be seen as a positive in the long run.
- Holding Company: A company that owns a controlling interest in the shares of other companies (subsidiaries) but does not typically engage in producing goods or services itself.
- Block Trade: A large, privately negotiated sale of securities between two parties, conducted off the open market to avoid causing significant price fluctuations.
- HBM (High Bandwidth Memory): A type of high-performance computer memory used in conjunction with high-performance graphics accelerators and network devices. It is essential for training and running large AI models.