Kwon Oh-chul, center, co-CEO of SK-Hynix, answers questions from reporters at a news conference at the Grand Inter-Continental Hotel in downtown Seoul, Tuesday. With him are Park Sang-hoon, left, chief production officer and Kim Joon-ho, right, head of SK-Hynix’s corporate center. / Courtesy of SK-Hynix

By Kim Yoo-chul

SK-Hynix, the world’s second-biggest manufacturer of computer memory chips, plans to build a new NAND flash memory factory in China.

Amid an explosive growth for high-end digital devices such as tablets and a positive outlook for further demand, top decision-makers of Hynix and SK have reached a broad consensus for the needs to build the new facility.

Hynix runs a factory to produce low-end dynamic random access memory (DRAM) chips in Wuxi, Jiangsu Province. The factory has a solid combination of Hynix’s Korean managers and Chinese workers.

``Hynix has no reason not to build a new NAND flash chip line in Wuxi. Because the plant is on an expansionary track, the Chinese plant will receive more investment,’’ said Kwon Oh-chul, co-CEO of Hynix, in a meeting with reporters, Tuesday.

The firm will officially be renamed as SK-Hynix after a board meeting, slated for later this month.

Kwon said the Wuxi plant has been doing well financially since its establishment and added Hynix regards the plant as a new growth engine.

``But I will discuss this issue with SK Group Chairman Chey Tae-won, who is the other Hynix co-CEO as to whether we will build a new NAND flash plant or expand the output of DRAM memory chips,’’ Kwon said. But he declined to give more details such as the type of investment.

NAND flash memory is the main memory component in the current generation of digital devices displacing hard disk drives.

It’s more profitable and less cyclical than existing DRAM chips as there are not many market players. Hynix has been shifting its top priority to expand the output of NAND chips in an attempt to meet rising customer demand.

The world’s top NAND flash supplier Samsung Electronics is still awaiting approval from Beijing over its plan to build a NAND flash line using cutting-edge technology. Samsung already received a green light from the Korean government for the project.

Samsung and Hynix are major suppliers of flash memory even to fierce rivals of its own products, including Apple, which produces many of its products at Chinese operations of manufacturers like Foxconn.

``Hynix is unhappy about its current global NAND flash share. We should increase the share as much as we can because we have the technology and our customers want us to ship more chips,’’ Kwon said. As of the end of the fourth quarter of last year, Hynix had an 11 percent global share, while in DRAM chips had more than a 20 percent global share.

During the meeting, Kwon said Hynix is placed to further raise its global presence in memory chips as Elpida Memory filed for Japan’s biggest bankruptcy protection in two years.

``Elpida should be limited for increases in investment. Its woes will help us for the next few years,’’ said Kwon.

``This is a good scenario. We are mulling the possibility to invest more to widen market gaps with our rivals and to narrow the gap with industry leader Samsung,’’ he said.

Elpida, ending prolonged speculation over how it will raise funds to repay large upcoming loans, is seeking protection from its creditors. The maker of DRAMs, commonly used in PCs, also said it will aim to rehabilitate under the court's supervision and will consider seeking backers for this step.

``Hynix sees better earnings in the latter half of the year. We’ve been receiving more requests from our customers to ship more.’’

Hynix has Dell, Hewlett-Packard, Apple and other leading PC makers based in Taiwan and China as its key clients.