SK invests $200 mn in US AI cluster builder SMART Global

SK Telecom Co. said on Tuesday it has agreed to invest $200 million in SMART Global Holdings Inc. (SGH), a US artificial intelligence cluster builder, in its largest-ever investment in an AI company to venture into the global AI infrastructure market.

Under the terms of the agreement, SK Telecom will buy 200,000 preferred shares in SGH for $200 million. They are convertible into SGH’s ordinary shares at $32.81 per preferred share, which will translate into a 10% stake in the Nasdaq-listed company.

Based in Silicon Valley, SGH designs, builds and operates AI clusters consisting of large-scale graphic processing unit (GPU) servers for companies such as Meta Platforms Inc. Its revenue came in at $1.44 billion in 2023.

AI clustering refers to the machine learning process.

SK Telecom, a sister company of the world’s No. 2 memory chipmaker SK Hynix Inc., has been accelerating its transformation into a global AI company with a focus on three pillars: AI semiconductors, AI infrastructure and GPU-based AI services.

In 2023, SK Telecom invested $100 million in Anthropic, a generative large language model (LLM) developer to create a Korea language-based LLM, followed by a $20 million investment in Lambda, a GPU cloud provider as a service, in February 2024. Last month, it injected $10 million into Perplexity AI, a generative AI search engine startup.

SGH offers specialized platforms and services for high-performance computing AI, machine learning and the Internet of Things optimized for generative LLM.

“We are thrilled to have SKT as a strategic investor,” Mark Adams, chief executive of SGH, said in a statement released by SK Telecom.

“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.”

Penguin Solutions refers to its integrated AI data center services ranging from the design of AI clusters consisting of large-scale GPU servers to data center deployment and operation.

“Our investment in and cooperation with SGH will give us an opportunity to boost our position in the AI value chain,” said Ryu Young-sang, chief executive of SKT.

“In the era of AI transformation, we plan to continue to collaborate and make proactive investments to achieve global leadership in AI,” he added.

SK Telecom also expects the upcoming merger between Rebellions, a semiconductor fabless startup and Sapeon Korea Inc., an AI chip producer, to beef up its AI semiconductor business. SK Hynix is a major shareholder of Sapeon.

Write to Seung-Woo Lee at leesw@hankyung.com

Yeonhee Kim edited this article.