SK hynix delays expansion of Cheongju chip plant

SK hynix's chip plant in Cheongju, North Chungcheong [SK HYNIX]

SK hynix will delay a planned expansion of its chip plant in Cheongju, North Chungcheong, following the lead of other big tech players as demand for electronic devices falls.

The board of the world’s second largest memory chipmaker decided to put the expansion on hold last month, according to industry sources and local media reports.

“The board members discussed the decision to build a new factory near the existing plant in Cheongju,” said a source with knowledge of the matter.

“But due to the uncertain economic outlook, they decided to postpone the plan,” the source said.

SK hynix declined to comment.

SK hynix planned to build a new factory to produce high-end NAND flash and dynamic random-access memory (DRAM) chips with an aim of completing it by 2025.

The postponement came as gluts develop for some types of memory chips, depressing prices, as customers shy away from buying smartphones, PCs and televisions as inflation rises.

“Unlike system-on-chips, production lines for memory chips need to run at a 100 percent capacity utilization rate once built,” the source said.

SK Chairman Chey Tae-won indicated last week the possibility of a postponement.
“[SK companies] could delay investment in a strategic move given that interest rates will keep on rising,” Chey told reporters during a visit to Jeju Island to attend a forum.
“Since the costs of raw materials have sharply increased, we need to adjust the plan,” he continued. “But this means the investment is being delayed, not cancelled.”

In a recent conference call, U.S. memory chip maker Micron also forecast a gloomy outlook for demand for memory chips and vowed to cut production to stave off a supply glut.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]