Crisis-reading insights, timely expansion shape SK’s growth history

SK Group Chairman Chey Tae-won, left, touches a wafer during his visit to SK hynix's plant in Icheon, Gyeonggi Province, Jan. 3, 2024. Courtesy of SK hynix

By Nam Hyun-woo

• Published Apr 9, 2025 5:01 PM KST
• Updated Apr 11, 2025 5:57 PM KST

SK Group celebrated its 72nd anniversary on April 8, marking a history that began with a textile mill built from salvaged machinery in the aftermath of the 1950-53 Korean War and has since evolved into a corporate empire spanning energy, chemicals, IT, semiconductors, batteries and biopharmaceuticals.

Throughout the journey, crisis-reading insights and timely expansion efforts have served as pivotal inflection points for the group’s growth.

And the groupis now envisioning artificial intelligence (AI) as the next one, which will navigate what SK Group Chairman Chey Tae-won calls the “triple whammy” of tariff wars, inflation and rapid technological changes driven by AI.

Textile to Chemical

SK was founded by Chey Jong-gun, who was born in 1926 in Suwon, Gyeonggi Province. In 1944, he took his first job as an apprentice engineer at Sunkyong Textile in the city, which was at the time run by a Japanese owner.

Chey left the company in 1949 to pursue his dream of becoming an entrepreneur, but that path was soon disrupted by the outbreak of the Korean War in 1950, which devastated nearly every corner of the country over the next three years.

Amid the ruins of war, founder Chey salvaged what remained of the textile factory and managed to reassemble 20 looms using broken parts. In 1953, he acquired the property through a postwar government disposition program and reestablished Sunkyong Textiles.

Korea’s postwar textile industry was already grappling with oversupply, creating a tough environment for newcomers. Under its founder's “quality-first” philosophy, however, Sunkyong’s linings and bedding fabrics released in 1955 gained nationwide popularity through word of mouth, laying the foundation for the company’s expansion as a textile group.

In April 1962, Sunkyong made its first export of 100,000 yards of synthetic silk to Hong Kong, valued at $13,000. This became a milestone for Korea as well, as textiles later became the country’s top export item in the 1970s.

In an effort to secure a stable supply of yarn, Sunkyong constructed an acetate factory in December 1968 and a polyester factory in February 1969. As these chemical materials are byproducts of petroleum refining, the investments later become the starting point for Sunkyong to enter the refining business.

From upstream to downstream

As founder Chey passed away in 1973, his younger brother, Chey Jong-hyon, took over as chairman.

Upon taking the helm of Sunkyong, the second Chairman Chey swiftly expanded the group’s business scope by establishing a petrochemical and refining unit. In 1975, he declared the group’s mission was to build a vertically integrated portfolio encompassing not only textiles and petroleum, but also construction, lumber, machinery and chemicals.

Chey’s bid picked up momentum when the government decided to privatize the state-run Korea Oil Corporation (KOCO) in October 1980 in the wake of the oil crisis of the 1970s.

At the time, the government set criteria for bidders demanding their ability to secure long-term and stable crude oil supplies, attract investments from oil-producing countries and negotiate with oil producers.

After a heated bidding process, Sunkyong was selected as the buyer, as the government prioritized the group’s capability to secure a crude supply, which was demonstrated by Chey’s role in Korea’s efforts to persuade the Saudi royal family to lift oil embargoes during the energy crisis.

In the wake of the second oil crisis, the former chairman visited Saudi Oil Minister Ahmed Zaki Yamani in December 1978 as part of a Korean government delegation and secured a commitment of 50,000 barrels per day by leveraging his strong relationship with the minister, who was widely viewed as the mastermind of the oil embargo.

After acquiring the KOCO, Sunkyong renamed the company as Yukong, and pursued a vertical structure of the group’s portfolio that spanned both upstream and downstream operations from oil exploration and refining to petrochemicals, film and textiles. In 1984, Yukong succeeded in upstream development by exploring oil in the Marib block in Yemen, and began shipping 150,000 barrels of crude oil from there in 1987.

Since then, Yukong has been operating as the flagship unit of Sunkyong and SK Group, playing pivotal roles in the conglomerate’s growth into one of Korea’s top five conglomerates. Yukong later became SK Innovation, which now stands as the largest private energy company in the Asia-Pacific region with assets worth 105 trillion won ($71.3 billion).

Telecom as growth driver

While acquiring Yukong, Chey also set his vision on the telecommunication industry, saying “a new era led by wireless telecommunications will soon arrive.” Under this view, SK Group set up a team dedicated to telecommunications in its U.S. base in 1984, and later set up Sunkyong Telecom in Korea in 1991.

A year after Sunkyong Telecom was established, the government announced its plans to select a private company as Korea’s second mobile telecommunication service operator, and a total of six consortiums vied for the license.

After a four-month selection process, Sunkyong was selected as the new mobile carrier, but soon became mired in a political controversy, as then-presidential candidate Kim Young-sam criticized the selection as “favoritism,” because the chairman's son, current Chairman Chey Tae-won, was married to then-President Roh Tae-woo’s daughter.

In response, Sunkyong returned the license just a week after it was granted. Its chairman said: “We cannot run a business under suspicion of favoritism, and we will earn legitimacy by vying for the license again in the next administration.”

The next Kim Young-sam administration started its mobile carrier initiative in December 1993, resuming the second mobile carrier license selection process and simultaneously privatizing the country’s first mobile carrier Korea Mobile Telecommunications Corp. (KMTC). In doing so, the government requested the Federation of Korean Industries (FKI) to spearhead the second carrier selection process.

However, the FKI had already appointed then Chairman Chey as its chairman. To avoid another fairness controversy, Sunkyong decided not to participate into the second mobile carrier license selection, and instead opted to make an open bid for KMTC, despite the higher cost.

KMTC’s stock was traded at around 80,000 won, but skyrocketed to over 300,000 won after the privatization announcement. Sunkyong in 1994 acquired the company at 335,000 won per share, paying a total of 427.1 billion won.

This was a far costlier choice compared to the estimated 60 billion won that Sunkyong needed to spend to become the controlling stakeholder in the second mobile carrier. Despite doubts, Chey said it was necessary to avoid any allegations of favoritism and Sunkyong could build up the company’s value over time.

This eventually became a visionary decision. KMTC, renamed as SK Telecom in 1997, became the world’s first mobile carrier to commercialize a Code Division Multiple Access mobile phone service in 1996. It is now the biggest mobile carrier in Korea, posting an operating profit of 1.8 trillion won last year.

Leading in AI era

After renaming Sunkyong as SK in January 1998, its chairman died of lung cancer in August that year. Taking over the group’s control at age 38, its third chairman, Chey Tae-won, explored strategies for the group’s long-term sustainability and viewed semiconductors as the next inflection point for SK’s growth.

In 2011, SK Telecom acquired Hynix Semiconductor, the No. 2 memory chip company in Korea suffering from financial instability, for a price of 3.43 trillion won. Hynix had been facing questions over its sustainability, because it was vulnerable to fluctuations in DRAM market prices, while investment and technological development in next-generation memory markets were relatively neglected.

Following the acquisition, however, SK hynix quickly became a profit maker, posting trillions of won in operating profit. As of last year, SK hynix’s revenue has grown more than sixfold from 2011, and its market capitalization has increased more than 10 times during the same period.

The growth was attributable to the group’s aggressive investments into the chipmaker. In 2012, most semiconductor firms were cutting investments by more than 10 percent due to a downturn in the memory market. However, SK Group poured trillions of won annually into research and development as well as building new memory semiconductor fabs.

During the period, the company also invested in the development of the high-bandwidth memory (HBM) chip, which is now standing as one of the most important chips for the artificial intelligence (AI) processor supply chain.

Buoyed by its HBM sales, SK hynix last year outpaced Samsung Electronics to become the most profitable memory chip maker in Korea, consolidating its position as the world’s dominant HBM supplier.

Following the success of SK hynix, SK Group is now focusing on AI as its flagship business.

During a TV appearance on Jan. 19, Chey said the current economic landscape is being hit by a triple whammy of tariff wars, subsequent inflation and rapid technological changes. To navigate these challenges, the chairman stressed that the AI data center business should be the pinnacle of the group’s portfolio given the group’s broad presence in energy, telecommunications, services and semiconductors.

“SK Group needs to prove how much our AI data centers and other solutions can help partners reduce costs,” Chey said during SK Group’s AI Summit event in November. “The reason they are doing business with us is because we have the potential to demonstrate that. If not, they would have gone elsewhere.”