Memory prices were sliding, gadget sales were soft and inventories were piling up. On 6 September 2022, SK Hynix went ahead and committed 15 trillion won ($10.9 billion) to a new chip plant anyway.
The world’s second-largest memory chipmaker said in a statement that it will spend the money over the next five years on a facility called M15X in Cheongju, south of Seoul. Construction starts in October and is due to finish in early 2025, Reuters reported. The company said the plan comes as it prepares for “the next upturn expected to come in 2025.”
What is being built
M15X will sit next to the company’s NAND flash fab in Cheongju. Maeil Business Newspaper’s English service Pulse said the two-story building will be roughly the size of the existing M11 and M12 fabs combined. SK Hynix has not said what M15X will make beyond memory chips. A spokesperson told Reuters that DRAM or NAND flash will be decided by market conditions, and declined to discuss planned capacity.
Cheongju is currently the company’s NAND site, while DRAM is made in Icheon. Pulse noted the new plant could turn out next-generation DRAM if work slips on the company’s 120 trillion won ($106 billion) Yong chip cluster. Overseas, SK Hynix also operates plants in Wuxi, Chongqing and Dalian in China.
Betting against the cycle
The timing is deliberate, the company suggests. SK Hynix noted that experts forecast a recovery from 2024 and a rebound in 2025, and that the cyclical nature of the business is becoming less volatile than in past years. Demand for memory was falling at the time as inflation, a global slowdown and supply chain uncertainty hit consumer gadget spending.
Vice Chairman and Co-Chief Executive Park Jung-ho tied the decision to a decade under SK Group, which the announcement marked. “SK hynix could grow into a global company as it boldly carried out investment during crisis,” he said. Starting M15X, he added, would be “a first step to lay foundation for a solid future growth.”
There is precedent. Pulse recalled that SK Hynix returned to profit in 2012 after lifting investment by more than 10 percent while rivals cut back, and that it built its M14 fab in Icheon in 2015 despite an uncertain market, which helped deliver record results for two years from 2017. It also noted that the company had put off a planned M17 plant in the Cheongju Technopolis complex in July, as the environment worsened. An unnamed industry official told Pulse: “It will be difficult to catch up with the market if investments are delayed.”
Pulse said the Cheongju plan may ease criticism that SK Hynix invests too little at home. SK Group, the parent, had recently announced a chip packaging facility in the United States, and Chairman Chey Tae-won said in July the group would invest $22 billion there. SK Hynix shares fell 1.6 percent to 90,300 won in Wednesday morning trading.
Sources
- SK hynix to expand NAND facility by 2025 at home via $10.9 bn capex – 매일경제 영문뉴스 펄스(Pulse)
- SK Hynix to invest $11 bln in new South Korea chip plant | Reuters
