SK Telecom pumps $200m into AI factory builder

• SK Telecom has been investing in all manner of AI companies in the past few years
• Now it has pumped $200m into California-based Smart Global Holdings (SGH)
• SGH designs and deploys high-performance computing systems for AI workloads 
• The investment will boost SKT’s “position in the AI value chain”, says CEO

In its latest move to position itself as an AI company, South Korean telco SK Telecom has announced a $200m investment in Smart Global Holdings (SGH), a California-based company that designs, builds and manages high-performance computing systems that are used for AI workloads. 

SGH has a number of different technology development and design business lines, including memory and storage solutions and LED (light emitting diode) chips and components. But its Intelligent Platform Solutions division, which generates about half of its annual $1.2bn revenues, is focused on building, deploying and managing high-performance computing, AI and internet of things (IoT) systems and services tailored to the specific needs of its enterprise customers, which can be deployed in the cloud or at private edge facilities. It will come as no surprise, then, that SGH counts AI chip giant Nvidia among its key partners. 

SK Telecom believes SGH complements its other AI activities, including its investments and partnerships with the likes of generative AI (GenAI) large language model developer Anthropic and GenAI search developer Perplexity, and plans to work closely with the US firm to develop “differentiated global end-to-end AI factory and datacentre solutions and services, advanced memory market products and services, and NPU-based AI edge servers.” (An NPU is a neural processing unit, otherwise known as an AI accelerator.) 

The companies plan to enter into a collaboration this year “with an emphasis on establishing a more concrete cooperation across the AI infrastructure business, including AI datacentre, edge AI, and future memory solutions,” noted SK Telecom in its announcement about the investment. The South Korean company believes the SGH relationship will “solidify [its] position in the AI value chain across the three pillars: AI semiconductor, AI infrastructure and AI services.”

SKT will invest $200m in SGH by acquiring 200,000 preferred shares: Those shares are convertible into ordinary SGH shares at a conversion price of $32.81 per preferred share. SGH’s share price currently stands at $29.35, having risen by about 1.5% on Monday following the news of SKT’s investment. SGH says the new capital will give it greater financial flexibility as it expands the scope and scale of its “end-to-end AI factory offerings”, which it takes to market using the brand Penguin Solutions. 

“SGH and Penguin Solutions have a proven methodology to deploy their AI infrastructure solutions at some of the most innovative and demanding large-scale enterprise customers in the world,” stated SK Telecom CEO Ryu Young-sang. “Our investment in and cooperation with SGH will give us an opportunity to boost our position in the AI value chain. In the era of AI transformation, we plan to continue to collaborate and make proactive investments to achieve global leadership in AI,” added the CEO. 

SGH is equally pleased, of course. “We are thrilled to have SKT as a strategic investor,” stated Mark Adams, CEO of SGH. “Today’s announcement is a testament to Penguin Solutions’ capabilities in the deployment of AI factories at scale through our systems, software, and managed services suite of solutions. We look forward to executing on these strategic collaboration opportunities with the SKT team and believe they will create value for our respective stakeholders.”

In its most recent financial quarter (for the three months to 31 May), SGH reported revenues of almost $301m, down more than 12% year on year, and an operating profit of $11.5m compared with a small loss a year earlier. 

- Ray Le Maistre, Editorial Director, TelecomTV