SMART Global secures $200m investment from SK Telecom to advance AI technologies

SMART Global Holdings, Inc. (NASDAQ: SGH), a premier designer and developer of enterprise solutions, has announced a significant $200 million preferred equity investment from SK Telecom (NYSE: SKM), part of the SK Group. This investment aims to bolster SGH’s financial position and enhance its innovative Penguin Solutions branded end-to-end AI factory offerings.

The collaboration between SGH and SK Telecom is set to leverage the strengths of both entities to develop global AI factory and data center solutions, which include advanced memory products and NPU-based AI edge servers. This strategic move is designed to amplify the capabilities of both companies in the competitive AI technology landscape.

SGH plans to use the $200 million capital infusion to expand the scope and scale of its AI technologies. SK Telecom will acquire 200,000 preferred shares of SGH, with each share convertible at $32.81, reflecting a 30% premium over the recent average closing price. These shares will yield a 6% annual dividend, which can be paid in-kind or cash, at SGH’s discretion.

Mark Adams, CEO of SGH, expressed enthusiasm about the partnership, stating, “We are thrilled to have SKT as a strategic investor. This partnership is a testament to Penguin Solutions’ capabilities in deploying AI factories at scale.”

Penguin Solutions, under SGH, has distinguished itself in the AI sector with its deployment of high-performance, high-availability systems, including innovative technologies like fluid-based immersion cooling and “zero fail” memory solutions. Currently managing over 75,000 GPUs, Penguin Solutions is a leader in AI infrastructure.

Ryu Young-sang, CEO of SKT, highlighted the strategic alignment, noting, “This collaboration will enhance the reach and capabilities of both SGH and SKT, positioning us to continue innovating in AI infrastructure and services.”

The investment is expected to close by the end of 2024, pending customary closing conditions. This venture not only enhances SGH’s ability to scale up AI solutions but also aligns with SK Telecom’s broader goals to strengthen its position across the AI value chain, which includes AI semiconductor, AI infrastructure, and AI services.

Centerview Partners serves as the exclusive financial advisor to SGH for this transaction, with Latham & Watkins providing legal counsel. SKT has engaged Baker McKenzie for legal advice.

This strategic investment by SK Telecom in SMART Global Holdings is poised to drive significant advancements in AI technologies, benefiting stakeholders and setting new standards in the industry.