SK Group will begin reducing the number of its 219 affiliates - more than three times that of Samsung Group - to a “controllable range.” This move comes in response to the group’s acknowledgment of its rapid expansion, which had led to substantial investment losses and created a group-wide bubble. The restructuring will adhere to “qualitative growth” principles and a “back to basics” approach.
New investments, except those related to semiconductors and artificial intelligence (AI), will be reviewed from scratch. Existing investments not aligned with the group’s core business will be substantially reorganized. SK Group also plans to eliminate or cut down on the ‘four-day work week,’ ‘flexible work system,’ and ‘autonomous seating system’ to “rectify the current disorderly corporate culture.” A leadership reshuffle for several affiliates is also under review.
“Under the leadership of Chey Chang-won, chairman of the SK Supex Council, the group’s top decision-making body, SK has developed a comprehensive strategy to eliminate excess within the group,” said a source familiar with the matter. “This strategy will be shared at the group management strategy meeting, which will be held on June 28-29.”
Chey Chang-won, the younger cousin of SK Group chairman Chey Tae-won and the group’s second-in-command, stressed at a recent executive meeting that the current 219 affiliates should be drastically reduced to a more “manageable” number.
The number of SK Group affiliates has more than doubled in six years, from 101 in 2018 to 219 this year, making it the largest among Korean conglomerates. Samsung Group has 63 affiliates, and Hyundai Motor Group has about 70. SK Group is South Korea’s second-largest conglomerate by assets after Samsung. Chey reportedly remarked, “It doesn’t make sense to have so many companies whose names I don’t even know and cannot manage.”
SK Square, an intermediate holding company with SK Hynix as a subsidiary, has been scrutinized in particular. SK Square holds stakes in 23 companies, but 18 are operating at a loss. SK’s top executives have reportedly directed SK Square to “restructure everything except for SK Hynix.”
The group has also been instructed to prioritize investments in AI and advanced chips. At a recent Supex meeting, SK Group chairman Chey Tae-won emphasized the need to “invest in AI and semiconductors while streamlining investments in the green energy and bio sector.”
Although the group’s core business will be centered on two pillars - ‘AI and semiconductors’ and ‘green energy and bio’ - the group aims to focus more on AI and semiconductors while the green energy and bio sector, which have seen redundant investments, will undergo restructuring. “Future business sales and mergers will be actively pursued in the battery, energy, and bio sectors,” said an industry insider.
In response to criticisms that the organization had become “too lax under the guise of flexibility,” SK Group has decided to make changes to its corporate culture. SK Supex, SK Corporation, SK Hynix, and SK Telecom will abolish or reduce the four-day work week, flexible work system, autonomous seating, and telecommuting policies and adhere to a one-hour lunch break. Detailed plans for each affiliate will be announced at the strategy meeting next week.
SK Group executives will be excluded from the four-day workweek policy. Since changes for employees require labor-management agreements, the executives will lead by example, according to company sources. The flexible work system will be abolished in principle, with exceptions only for pregnant employees and those with young children.
