The funding announcement comes just as the group’s massive chip-making unit warned of a drop in consumer demand for tech products for the rest of the year. It also coincided with a key vote in the US Senate on Tuesday to advance a bill to increase domestic semiconductor production.
Leaders of the gigantic SK Group virtually met with US President Joe Biden on Tuesday to announce the historic deal, which is expected to create more than 15,000 new jobs.
While the exact timing of the investments was not disclosed, Biden said the Seoul-based business giant plans to grow its U.S. workforce from 4,000 to 20,000 by 2025.
The SK Group said it would direct the funding towards increased production and development of semiconductors, electric vehicle batteries and pharmaceuticals.
Up to $14 billion will go toward building two new gigafactories in Tennessee and Kentucky, in a joint venture with Ford (F)said the group’s chairman, Tae-won Chey, in remarks made public by the White House.
Biden touted the announcement as “proof that the United States, Korea and their allies are back and have won the tech contest of [the] 21st century.”
“In the past, these types of technology investments were directed to China,” he said.
The president said he took a closer look at South Korea’s advanced manufacturing capabilities during his trip to the country in May, where he also visited a Samsung (SSNLF) factory and met the president of Hyundai.
Biden, who joined the meeting virtually from the White House residence after testing positive for Covid-19 last week, acknowledged the irony of hosting guests from South Korea while self-isolating a few meters away.
“I feel so bad – I’m so close to you,” he told the SK delegation, later posting a photo of himself waving from a balcony on social media.
SK Group had already earlier this year committed $30 billion in the United States by the end of 2025. Biden and Chey said on Tuesday that the new investment comes on top of that.
The news came as SK Hynix, the group’s chipmaking unit, warned on Wednesday that it expects sales of some electronics products to decline in the coming months.
While the company had strong sales in the second quarter – with record revenue – it anticipates a slowdown in demand for memory chips in the second half.
Indeed, shipments of PCs and smartphones using these components could be “lower than originally expected,” SK Hynix said in a statement when presenting its results.
The company is the world’s second largest manufacturer of flash memory chips and a supplier of Apple (AAPL)among other brands.
– CNN’s Donald Judd contributed to this report.
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