South Korea’s second biggest conglomerate is investing $22 billion into the United States, in high-priority areas including chips and clean energy.
The funding announcement comes just as the group’s massive chipmaking unit warned of weaker consumer demand for technology products for the rest of the year. It also coincided with a key vote in the US Senate on Tuesday to push forward a bill that seeks to increase domestic production of semiconductors.
Leaders from the mammoth SK Group met virtually with US President Joe Biden on Tuesday to announce the landmark deal, which is expected to create more than 15,000 new jobs.
While the exact timeline for the investments was not disclosed, Biden said that the Seoul-based corporate giant plans to grow its US workforce from 4,000 to 20,000 people by 2025.
SK Group said it would direct the funding to 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), the group’s chairman, Tae-won Chey, said in remarks made public by the White House.
Biden touted the announcement as “evidence that the United States, Korea and its allies are back, and winning the technology competition of [the] 21st century.”
“In the past, these kinds of technology investments went to China,” he said.
The president said he had taken 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 with the chairman of Hyundai.
Biden, who participated in the meeting virtually from the White House residence after testing positive for Covid-19 last week, acknowledged the irony of welcoming guests from South Korea while he was isolating mere yards away.
“I feel so badly — I’m so close to you,” he told the SK delegation, later posting a shot on social media of him waving from a balcony.
SK Group had already earlier this year committed $30 billion in the United States by the end of 2025. Biden and Chey said Tuesday that the new investment was on top of that.
The news came as SK Hynix, the group’s chipmaking unit, warned Wednesday that it expected sales of some electronics to drop in the coming months.
While the company enjoyed strong sales in the second quarter — with its revenue reaching a record high — it anticipates a slowdown in demand for memory chips in the second half of the year.
That’s because shipments of PCs and smartphones that use those components could be “lower than initially predicted,” SK Hynix said in a statement during its earnings presentation.
The company is the world’s second biggest flash memory chipmaker and a supplier to Apple (AAPL), among other brands.
— CNN’s Donald Judd contributed to this report.