(Bloomberg) -- SK Group is putting its money into a new fund designed to help South Korean chip firms set up shop in China, even as the US ratchets up pressure on its allies to curb Beijing’s tech ambitions.
SL Capital, a private equity firm formed by SK and Beijing-based Legend Capital, signed an agreement with authorities in the eastern Chinese city of Wuxi on Tuesday to jointly set up a 1 billion yuan ($140 million) fund, according to a statement from the local government. SL Capital is financing the investment via a joint venture with Wuxi Industry Development Group Co., which is backed by the local government. The move is designed to help leading companies in South Korea’s chip supply chain to set up operations in the municipality, the statement said.
The new fund also includes money from Wuxi National Hi-Tech District. The parties involved in the fund have worked together to bring South Korea’s chip equipment suppliers Nextin Inc. and Gigalane Co. to Wuxi, according to the statement.
“SL Capital is a fund established by SK Group together with Legend Capital, but it is managed by SL Capital and SK Group is not directly involved in the fund management,” SK said in a statement to Bloomberg News, adding SL Capital has nothing to do with SK Hynix Inc.’s investment in semiconductors. SK’s semiconductor unit is the world’s leading AI memory chipmaker and a close partner to Nvidia Corp.
SL Capital has invested in several Chinese semiconductor firms, including AI chipmaker Black Sesame International Holding Ltd., according to the fund’s official WeChat account.
A Nextin official told Bloomberg News that it is still in the process of setting up facilities in Wuxi after signing a preliminary agreement with local authorities in August 2023. Gigalane is preparing to set up an equipment unit in Wuxi and target the Chinese market, according to a company statement in June. Multiple calls and an emailed request for comment to the company went unanswered.
China is aggressively seeking more partners to help it achieve self-sufficiency in critical fields including semiconductors to overcome growing US restrictions on the Asian nation’s access to advanced technologies.
Meanwhile, SK Hynix relies on China as a major market and a key manufacturing hub for its memory chips, operating plants in Wuxi, Chongqing and Dalian. SK Hynix, however, does not make its AI memory chips in China. The US is considering preventing Chinese firms from obtaining those sophisticated components.
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