SK Hynix invests $2.6B as chip demand soars

SK Hynix, the world’s No. 2 memory chip maker, is spending a combined 3.15 trillion won ($2.63 billion) to build new manufacturing facilities in Korea and China to keep up with booming demand worldwide for NAND flash memory chips, the company said Thursday.

Much of the investment, about 2.2 trillion won, will go toward building a cutting-edge semiconductor plant in Cheongju, North Chungcheong.

The factory will be built on land spanning 234,000 square meters (60 acres) inside Cheongju Technopolis, an industrial complex in the city.

The design process will begin next month, and construction is scheduled to last from August 2017 to June 2018.

“The new semiconductor plant to be constructed in Cheongju will serve as our core base that will help us prepare for looming industrial changes,” said Park Sung-wook, CEO of SK Hynix.

The company has yet to lay out a timeline for when the plant will be equipped with related facilities and machinery.

SK Hynix said it will depend on the market situation and its technology capacity after construction is complete.

The project is part of long-term investment plans that the company announced in August 2015 as SK Hynix celebrated the completion of an M14 DRAM chip plant.

The company said it would devote 46 trillion won to building three additional chip plants to sustain its leadership in the industry.

Thursday’s announcement comes as advances in real-time data processing, big data analysis and Internet of Things technology has propelled demand for high-performance memory chips used for long-term data storage. According to market researcher IHS, revenue from NAND chips is projected to expand 5.9 percent next year to $35.7 billion, compared to 5.7 percent growth estimated for this year.

Prices of DRAM and NAND flash memory chips, the main component of solid-state drives, have also been rising in the second half this year.

Market researchers forecast the momentum will continue in 2017.

SK Hynix said it would set aside 950 billion won to expand the clean room, used to package memory chips for transportation, at its Wuxi plant in China.

The factory has been rolling out half of all DRAMs that SK Hynix produced, but the clean room’s small size relative to production volume has been dragging down productivity.

The expansion process will take place from July 2017 to April 2019.

Shares of SK Hynix closed up 1.11 percent on Thursday at 45,500 won.

BY SEO JI-EUN [seo.jieun@joongang.co.kr]