SK hynix to invest W3.15 tril. to expand memory chip output
By Lee Min-hyung
SK hynix will invest a total of 3.15 trillion won ($2.62 billion) to expand its memory chip output in Korea and China, a move to meet growing demand for larger storage in mobile devices and computers, the company said in a regulatory filing, Thursday.
The Seoul-based semiconductor firm said it will invest 2.2 trillion won to build a plant in Cheongju, North Chungcheong Province, in its bid to increase production of 3D NAND flash chips. The firm plans to finalize its construction by June 2019.
The company will also allocate 950 billion won in its DRAM chip plant in Wuxi, eastern China, to construct new clean rooms at the firm’s largest DRAM manufacturing facility there. The company said the move is intended to maximize DRAM chip production efficiency.
The latest decision comes amid the ongoing industry-wide transition to 3D NAND process architecture, due to surging demand for smartphones with more storage capacity and computers using solid-state drives (SSD).
In August last year, the firm unveiled its plan to invest a total of some 46 trillion won into building three semiconductor plants: one in Cheongju, North Chungcheong Province and two in Icheon, Gyeonggi Province.
“The new chip plant in Cheongju will become our key production facility to gear up for the upcoming fourth industrial revolution,” SK hynix Vice Chairman and CEO Park Sung-wook said.
The company said the new investment would help the firm increase its market share in the global NAND flash industry. The company has sold its 36-layer 3D NAND chips since the second quarter of this year, and started mass-producing 48-layer ones this November. SK hynix will also complete development of a 72-layer 3D NAND chip in the first half of next year, planning to mass-produce it in the second half of the year, according to the firm.
Expectations are that the new investment will help the firm gain competitive ground and increase its global NAND share.
According to data from IHS Technology, SK hynix held a 10.7 percent NAND flash market share in the second quarter, narrowing the gap from the fourth-largest player, Micron, which accounted for 11.4 percent in the same period.
The new investment initiative comes in the wake of similar decisions from industry-leading players Samsung Electronics and Toshiba.
In October, Samsung Electronics, the top NAND chip manufacturer, unveiled its plan to complete construction of a new chip plant in Pyeongtaek, Gyeonggi Province, by the end of this year, in its bid to expand production capacity of 3D NAND chips.
Daishin Securities analyst Claire Kim said the recently announced investment would help drive up SK’s stock value.
“The firm’s recent decision is expected to prompt an increase in its stock price, as the investment will enhance its status,” Kim said in a report.
“On top of that, technological leadership is very crucial in the semiconductor industry.”
In an annual management reshuffle on Wednesday, Park was promoted to the firm’s vice chairman, which Kim says shows the semiconductor firm is expanding its presence within SK Group.