SK Hynix to invest ＄13 billion in Icheon fab plant

A day after reporting record quarterly earnings, SK Hynix announced Friday it would spend 15 trillion won (＄13 billion) to build a new factory in Icheon, Gyeonggi, where its headquarters is located.

The world’s second-largest memory chip maker said in a regulatory filing that its board of directors met Friday morning to agree on spending 3.49 trillion won on the initial phase of a new fabrication plant on a plot of 53,000 square meters (13 acres).

Construction will begin late this year and SK plans to finish it by October 2020.

Including all construction and equipment, the total investment in the new facility will amount to 15 trillion won.

The new plant is “to respond to growing demand for memory chips and to secure a future growth engine,” the company said in a release. “It is essential to make additional investments in order to meet growing memory demand. As the dimensions of semiconductor manufacturing equipment are getting larger, it is also important to secure enough cleanroom space in advance.”

The project is in line with the promise SK Chairman Chey Tae-won made in August 2015 to earmark 46 trillion won to build three additional plants in the next decade to remain a top player in the semiconductor industry.

He was speaking at a ceremony to celebrate the completion of M14 in Icheon, the world’s largest chip plant by far.

The country’s third-largest conglomerate is also stepping up to the Moon Jae-in administration’s request for large companies to beef up investments and create more jobs.

“The facility’s investment plan is an outcome of communications with various interested parties including the central and local governments,” said SK, “meant mostly to generate quality jobs and revitalize the national economy.”

People in the industry expect the new plant, which is dubbed M16, to make DRAMs, given that SK made it clear that another fabrication plant, M15, slated for completion in September in Cheongju, North Chungcheong, will be devoted to producing 3D NAND flash memory chips.

SK did not confirm what will be made at M16, only saying that the portfolio will be decided by considering future market conditions as well as the company’s technology capability.

DRAMS and NAND flash chips are key pillars of SK Hynix’s product portfolio and demand for such chips is on a constant rise as more data centers are built and more smartphones are made. SK Hynix is also in the middle of building a foundry in Wuxi in China in a joint venture with a Chinese state firm, set for completion by the year’s end.

In regards to the new plant, the Institute of Economic Research at Seoul National University estimates it will contribute to production valued at 80.2 trillion won and 26.2 trillion won added value by 2026. Almost 350,000 new jobs will also be created.

SK Hynix on Thursday said it posted record highs in both revenue and operating profit in the second quarter.

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