Analysis: SK Group becomes most profitable conglomerate in Korea
June 26 (UPI) -- SK Group has emerged as the most profitable conglomerate in South Korea thanks to the stellar performance of its key affiliate SK hynix, the world's No. 2 memory chipmaker.
According to Seoul-based business tracker CXO Institute on Wednesday, SK Group's subsidiaries recorded $20 billion in operating profit last year, surpassing Samsung Group's $19.9 billion.
This means that Samsung Group, a perennial leader in profitability, has now failed to claim the top spot for two consecutive years. In 2023, Hyundai Motor Group led the rankings for operating income.
"Throughout last year, SK hynix single-handedly carried SK Group. And the trend is expected to continue this year, which means SK Group may become the most profitable company for two straight years," CXO Institute chief Oh Il-sun told UPI.
Lee Phil-sang, an adviser at Aju Research Institute of Corporate Management and former Seoul National University economics professor, echoed that view.
"Samsung Electronics is putting forth great efforts to catch up in next-generation chips, but it will take some time. SK hynix is projected to be more profitable than Samsung Electronics this year," he said in a phone interview.
Driven by the booming sales of high-bandwidth memory (HBM) chips, which are used for AI applications or supercomputers, SK hynix delivered record-breaking profits in 2024.
Its operating profit reached $17 billion, accounting for 85% of SK Group's total, a dramatic turnaround from its $5.68 billion operating loss in 2023. In the first quarter of this year alone, SK hynix chalked up $5.48 billion in operating profit.
Based on the impressive results, the company's market capitalization topped $150 billion this week for the first time, trailing only Samsung Electronics' $262 billion. The latter is the world's largest manufacturer of memory chips and smartphones.
Despite SK's current edge, some watchers believe that Samsung Group may reclaim the top position this year as the prices of DRAM, a major product of Samsung Electronics, show signs of recovery.
"From the third quarter, technology and sales are expected to gradually normalize," Daishin Securities analyst Ryu Hyung-keun noted in a recent report. "While it won't be easy to restore technological competitiveness in a short period, the strategic shift should begin to yield signs of improvement in the second half."
Samsung Electronics posted $4.9 billion in operating profit during the first three months of 2025, up 1.2% year-on-year.
When it comes to 2024 sales, Samsung Group was the runaway leader with $294 billion, far ahead of $215 billion of Hyundai Motor Group and $152 billion of SK Group.
Samsung Group also led in employment as more than 280,000 workers were on its payroll, compared to around 200,000 for Hyundai Motor Group and 150,000 for LG Group.
In terms of per-capita turnover, Mirae Asset Group was atop the list with $2.7 million. It is one of the biggest financial conglomerates here, focusing on asset management, brokerage, investment banking, and insurance.
"We can say that Mirae Asset workers generated the largest added values on average last year. In other words, the group wins out in efficiency," CXO Institute's Oh said.
By contrast, LG Group struggled to find its feet last year as the outfit failed to remain profitable. The Seoul-based group logged $392 million in operating loss, up 38% from a year before.
"LG Group has been languishing because its main unit LG Energy Solution faced a double whammy of the electric car chasm and the intensifying competition from Chinese players," said economic commentator Kim Kyeong-joon, formerly vice chairman at Deloitte Consulting Korea.
"The group should address both issues to rebound, which is not an easy task," he added.
The term EV chasm refers to the weaker-than-expected demand for electric cars in recent years due to the gap between early adopters and mass market consumers. LG Energy Solution is one of the world's foremost EV battery producers.
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