Posted : 2013-08-21 18:38
Updated : 2013-08-21 18:38

SK hynix to expand in China

Executives of SK hynix' client companies listen to a briefing about the Korean chipmaker's business strategies for image sensors at the CIS Showcase 2013 in Shenzhen, China, Wednesday. / Courtesy of SK hynix

Chipmaker enhancing image sensor business

By Kim Yoo-chul

SK hynix, the chip-making affiliate of SK Group, is expanding its business portfolio in China by capitalizing on growing demand for Web-based devices from smartphones to tablets there.

The company has increased investment in the rapidly-growing market. The firm, already one of the most trusted chip suppliers in the neighboring country, runs a manufacturing plant worth billions of dollars in Wu'xi.

Now, its new target is image sensors ㅡ a critical component to gauge the functionality of cameras for smartphones and tablets.

In a statement, the company said it held an event to introduce its image sensor products and to highlight its strengths in related technologies to clients in the Chinese city of Shenzhen.

The chipmaker's existing key clients including ZTE and Huawei, China's well-known budget smartphone manufacturers, were invited to the event, according to the statement.

"Over 100 Chinese chipset makers and module houses came to the event, which is quite impressive. They were briefed over our new vision toward image sensors, detailed business plans and specifications of our key products like eight megapixel sensors using an advanced backside illumination (BSI) tech," said the statement.

This is the first time that the Korean chipmaker held a massive event aimed at enticing new customers for the firm's upgraded solutions.

Simply, SK hynix wants to transform itself into a total solution provider. To match with the strategy, the company entered a comprehensive cross-licensing period with Samsung Electronics.

While the chip producer has so far been known as a supplier for conventional DRAM and flash memory chips over the past decades, SK hynix is hurriedly shifting its focus toward high-end chip solutions to secure future growth engines.

The company is one of the few survivors in the volatile chip market, which is now
being rationalized after exits and bankruptcies.

Meanwhile, image sensor technology is required to have advanced NAND flash quality. It is committed to expanding its share in the flash memory business segment that is relatively weak compared to its strengths in DRAMs.

"This is clear that we are aiming to provide customers in the mobile market with a wide lineup of products. Image sensors have higher growth potential considering the rapidly increasing consumer demand for connected devices with mobile DRAMs," company spokeswoman Park Seong-ae said.

Because SK hynix is sharing its patents with Samsung, there are some chances that the world's top chip supplier Samsung will eventually use hynix-supplied image sensors for the Galaxy line of devices, which could be another milestone for SK if it materializes, according to analysts.

The company re-entered the image sensor business in 2007 to diversify its product portfolio. Its sales have been doubling every year since.

Such business diversification is also yielding visible returns in its corporate stability.

Moody's Investors Service has upgraded the rating of SK hynix to Ba2 from a previous Ba3.

"The upgrade reflects our expectation that SK hynix's operating and financial profile will remain solid, given the consolidation of the DRAM industry and the company's strategic focus on higher value-added products, especially growing mobile DRAM," said Yoshio Takahashi, assistant vice president at the credit rating's agency.

"Given the industry's oligopolistic structure, competitive pressures in the market will decrease, resulting in more balanced supply and demand. SK hynix will gain pricing power and better manage their capacity additions," Takahashi said.

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