SK hynix to plow $11b into South Korean fab complex

Leadership believes path to recovery is through investing in times of crisis

Chipmaker SK hynix intends to invest nearly $11 billion over the next five years on a new manufacturing plant in South Korea, showing confidence in the future despite the curent dip in demand for semiconductors.

The memory chip biz announced that it plans to break ground in October on the M15X (eXtension), a new semiconductor fabrication facility at the Cheongju Technopolis industrial complex, which SK said is being built "in preparation for future growth."

A total of ₩15 trillion (about $10.9 billion) will be spent on the site over the next half a decade to construct the fab and set up production facilities, the company said. The fab will be a two-story building equivalent in size to its existing M11 and M12 manufacturing plants combined.

The plant is expected to start production of memory chips in 2025, but according to Reuters, SK hynix declined to say whether this will be DRAM components or NAND flash memory for storage devices. Neither would SK indicate what production capacity the plant is expected to be.

The announcement comes as demand for semiconductors is said to be weakening across multiple sectors, including PCs and smartphones, as consumers rein in spending in response to surging inflation and worsening economic outlook.

Last month, Korean chipmakers reported their first fall in shipments for almost three years, with figures from the Korean national statistics office showing that semiconductor shipments in July were down 22.7 percent compared with the same month last year.

But SK hynix is aware of this, saying it is investing in the M15X plant in preparation for the next upturn, which it expects to come in 2025.

Vice chair and co-chief executive Park Jung-ho said that the company had grown into a global supplier over the past 10 years by investing during times of crisis.

"As we look to prepare for the next 10 years now, I believe starting the M15X will be a first step to lay foundation for a solid future growth."

Demand for memory chips may be rapidly falling in the wake of the global economic slowdown and instability of the supply chain, but experts foresee that the business will start to recover steadily from 2024 and rebound in 2025, claiming that the memory business cycle has become less volatile in recent years.

SK hynix is already planning an additional semiconductor manufacturing plant, which is to be known as its M17 fab. The company said it will decide on the construction plan after reviewing the overall business environment, including possible changes in the semiconductor business cycle. ®