SK Hynix to Double Foundry Production Capacity with Investment in 8-Inch Technology

Vice Chairman Park Jung-ho "Reviewing strategic measures such as domestic facility expansion and M&A"

[Image source=Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] SK Hynix Vice Chairman Park Jung-ho revealed on the 13th that the company is considering doubling its current foundry (semiconductor contract manufacturing) production capacity. Various options, including mergers and acquisitions (M&A), are being explored, and investments will be made in the 8-inch foundry business, with plans to collaborate with domestic fabless companies.

Vice Chairman Park attended the 'K-Semiconductor Strategy Report Conference' held at Samsung Electronics' Pyeongtaek Campus in the afternoon and expressed his welcome for the government's announcement, stating, "We are considering a plan to double the foundry production capacity compared to the current level." He also mentioned that various strategic options such as domestic facility expansion and M&A will be reviewed.

SK Hynix is looking into investing in the 8-inch foundry business, which falls under the old process category. This is due to the sharp increase in demand for semiconductors produced in 8-inch foundries, such as power management integrated circuits (PMIC) and display driver ICs (DDI), following the surge in electronic device demand after the COVID-19 pandemic. An SK Hynix official stated, "We will support the development, mass production, and global market entry of domestic fabless companies," adding, "Through this, we can expand the supply range of semiconductor products for global companies in mobile, home appliances, and automotive sectors."

Currently, SK Hynix's non-memory business accounts for about 2% of sales, with its subsidiary SK Hynix System IC operating a foundry business in China, and some foundry facility space remaining at the Cheongju plant (M8). The production capacity held by SK Hynix System IC is known to be about 85,000 to 100,000 8-inch wafers per month. Doubling this capacity would bring it to around 170,000 wafers per month, surpassing the 130,000 wafer monthly capacity of DB Hitek, the world's 10th largest foundry company based on 8-inch wafers.

This is not the first time Vice Chairman Park has mentioned expanding foundry investments. Earlier, on the 21st of last month at the World IT Show held at COEX in Samseong-dong, Seoul, he emphasized, "We need to invest more in foundries," and stated that if domestic fabless companies are provided with services comparable to Taiwan's TSMC, the world's number one foundry, these companies could achieve various technological developments. Subsequently, at SK Hynix's first-quarter earnings announcement at the end of last month, Executive Vice President (CFO) Noh Jong-won specified, "We will invest in 8-inch foundries," concretizing Vice Chairman Park's plans.

Industry insiders expect that with this announcement, Vice Chairman Park will soon reveal concrete investment plans such as M&A and equity acquisitions. Having led SK Telecom's acquisition of SK Hynix in 2012, been involved in the 2017 investment in Japan's Kioxia (formerly Toshiba Memory), and last year's acquisition agreement for Intel's NAND business, Park has been directly involved in SK Hynix's investments. This has led to speculation that, beyond the company's current strength in memory semiconductors, it may aggressively enter the system semiconductor sector as well.