Building a chip factory in the middle of a slump sounds like bad timing. SK Hynix did it anyway. On September 6, 2022, the world’s second-largest memory chip maker said it would put 15 trillion won ($10.9 billion) into a new plant in Cheongju, south of Seoul, spread over five years.
The plant has a name, M15X, and a schedule. Workers start in October 2022 and the company expects to finish in early 2025. It will sit on 60,000 square metres inside the Cheongju Technopolis industrial complex, on land SK Hynix already held. The company moved earlier than it had planned, it said, because of market conditions. The building will have two storeys and match the combined size of two existing fabs, M11 and M12.
What it will make is still open
Here is the odd part. The plant will produce memory chips, but nobody outside the company knows which kind yet. A spokesperson told Reuters the choice between DRAM and NAND flash will follow market conditions, and declined to say anything about planned capacity. For context, SK Hynix makes DRAM at Icheon in South Korea and NAND flash at Cheongju, with further plants in Wuxi, Chongqing and Dalian in China. Its parent, SK Group, had also recently announced plans for a chip packaging facility in the United States.
A bet against the cycle
Memory is a boom-and-bust trade. At the time, demand was sliding as inflation, a global economic slowdown and shaky supply chains cut into gadget sales. SK Hynix’s own statement argued that experts expected a steady recovery from 2024 and a rebound in 2025, and that the cycle was getting less volatile. “The plan to build the M15X comes as SK Hynix prepares for the next upturn expected to come in 2025,” the company said.
It has made this kind of move before, and said so. In 2012, with the industry cutting back and SK Hynix itself in the red, it raised investment by more than 10% on the year before and, by the end of that year, had turned around. It built the M14 fab in Icheon in 2015 ahead of the next upswing, and posted record results for two straight years from 2017. A 2015 pledge to spend 46 trillion won from 2014 on three more fabs, M14 included, was met early once the M15 in Cheongju opened in 2018 and the M16 in Icheon in 2021.
“Looking back on the past 10 years, SK hynix could grow into a global company as it boldly carried out investment during crisis,” said Park Jung-ho, vice chairman and co-chief executive. He called the M15X “a first step to lay foundation for a solid future growth”.
One decision stays on hold. The next fab, M17, will get a construction plan only after the company reviews the business environment, including where the chip cycle stands.
Sources
- SK hynix to Build M15X Fab in Cheongju (SK hynix Newsroom)
- SK Hynix to invest $11 billion in new South Korea chip plant (Reuters, via ETTelecom)
