SK Hynix's Global Footprint Grows While Its Workforce Demands a Bigger Slice

SK Hynix workers narrowly reject wage deal by 25 votes despite record Q2 profits, as Temasek eyes stake and expansion plans proceed.

The arithmetic behind SK Hynix's labor dispute is almost painfully tight. Out of 15,045 ballots cast, 50.08 percent voted against the proposed wage package — a margin of just 25 votes. That razor-thin rejection has sent management and union representatives back to the negotiating table at a moment when the memory chipmaker is posting numbers that would have seemed unthinkable a year ago.

The rejected offer had included a 6.3 percent base salary increase and a bonus structure that marked a notable departure from company tradition: 40 percent in cash and 60 percent in company stock, breaking with the previous all-cash approach. The original agreement between management and labor representatives had actually called for at least 60 percent of this year's bonuses to be paid in shares, alongside a clause permitting wage deferrals of up to three percent in the event of losses. That compromise clearly didn't go far enough for the workforce.

Record Results, Restless Employees

The timing of the rejection is awkward, to put it mildly. SK Hynix's second quarter delivered revenue of 79.3187 trillion won and operating profit of 60.5426 trillion won, translating to an extraordinary 76 percent operating margin. Net income reached 93.9226 trillion won. Year over year, revenue and operating profit surged 257 percent and 557 percent respectively. For the first time in corporate history, cumulative first-half revenue crossed the 100 trillion won threshold.

The engine behind these figures is HBM4, the high-bandwidth memory product whose mass production kicked off in the second quarter. Yields and quality are already approaching the levels of the mature HBM3E predecessor. Management has locked in long-term supply agreements with roughly ten customers and plans to keep scaling production through the second half of the year.

Yet the workforce's refusal to accept the package suggests employees believe they deserve a more substantial share of this extraordinary success. The standoff highlights the tension inherent in a boom cycle: record utilization and massive investment requirements on one side, distributional conflicts over the resulting profits on the other.

A Singaporean Suitor Circles

While labor talks stall, another storyline is developing on the ownership front. Media reports indicate that Singapore's Temasek Holdings is exploring a direct investment in both SK Hynix and Samsung Electronics — a move that would mark the sovereign wealth fund's first-ever entry into the Korean equity market. Temasek is said to be in contact with the Korean government to coordinate the timing. When the news broke mid-month, the stock's gains briefly widened to more than 8 percent.

The potential Temasek entry comes on top of a substantial capital return program announced roughly three weeks ago. SK Hynix unveiled a 40 trillion won share buyback with cancellation of the repurchased shares, plus a commitment to distribute more than half of free cash flow to shareholders between 2025 and 2027. The buyback, covering up to 24 million shares, is scheduled to run from August 20 through November 19, 2026. Reuters Breakingviews interpreted the move as a response to investor pressure for greater participation in the enormous cash flows generated by the AI boom. Since the announcement, the stock has gained 10.0 percent.

Building on Multiple Fronts

The expansion agenda extends well beyond Korea. SK Hynix is reportedly evaluating the construction of a memory chip plant in Japan's Miyagi prefecture, with the investment potentially reaching several tens of trillions of won, according to Reuters. The company itself poured cold water on the speculation, stating that no decision has been made and that any location with appropriate infrastructure remains a candidate.

CEO Kwak Noh-Jung has been explicit about the strategic rationale: the company expects memory chip shortages to persist through the end of 2030. That outlook underpins a series of capacity moves. The company plans to begin mass production of HBM4E chips at its Indiana facility in the third quarter of 2029. Thursday also saw the groundbreaking for a new HBM packaging factory, another element in a global strategy designed to secure SK Hynix's position in the AI-driven memory market.

On the NAND side, subsidiary Solidigm has resumed investment in Fab 2 in Dalian, China, completing the factory building. Equipment installation could begin as early as November, with mass production of NAND memory targeted for the first half of 2027. The expansion is expected to add roughly 50,000 wafers per month to the existing 100,000-wafer capacity at Dalian Fab 1 — an increase of about half at that site.

Market Snapshot and Political Tailwinds

The stock has shown resilience at the start of the week, gaining 1.3 percent to trade at 1,674,000 won after Friday's close of 1,653,000 won. A separate report put the current price at 1,654,000 won, nearly unchanged from the Friday close. Either way, the shares remain far from their 52-week high of 2,987,000 won reached in late June, and trade roughly 13 to 14 percent below their 50-day moving average. Over the past 30 days, the stock is down 3.7 percent, suggesting the consolidation following a powerful rally hasn't fully run its course. Year to date, however, the shares are still up 158 percent, and the market capitalization stands at approximately 735.31 billion euros.

Political support adds another layer. South Korea's finance ministry has announced plans for a new fund that would channel tax revenue from the semiconductor boom into youth development and AI investments. For SK Hynix, one of the country's central chip manufacturers, it's another sign that the industry enjoys strategic priority status — an environment that should only help the company's international expansion plans.

The next quarterly report arrives on October 27, and investors will be watching two things: whether the HBM4 momentum continues, and whether management and labor can bridge a 25-vote gap that has become the defining internal challenge of this otherwise spectacular year.