SK hynix doubles down into downturn with new Cheongju chip plant

SK hynix, the world's second largest memory chipmaker, will invest 15 trillion won ($10.9 billion) over five years to build a new chip factory in Cheongju, North Chungcheong.

SK hynix M15 plant in Cheongju, North Chungcheong [SK HYNIX]

SK hynix, the world's second largest memory chipmaker, will invest 15 trillion won ($10.9 billion) over five years to build a new chip factory in Cheongju, North Chungcheong.

It is making the massive commitment on expectations that demand for semiconductors rebounds following the current downturn in memory chip prices.

The M15X factory will be located next to the existing M15 plant and has an early 2025 target for completion. Construction will begin in October.

Planned plants at the Cheongju site are illustrated in red and existing plants in orange. [SK HYNIX]

According to the company, the time line has been accelerated.

SK hynix has not decided what products will be manufactured at the 60,000-square-meter (645,835-square-foot) facility, according to the company, but industry analysts have said that NAND flash chips may be made there given that these semiconductors are manufactured at existing plants in Cheongju.

The new plant will be the fourth manufacturing facility at the Cheongju site, and its size will be equivalent to that of the existing M11 and M12 plants. SK hynix has three plants in Icheon, Gyeonggi, where dynamic random-access memory (DRAM) chips are made.

The Korean chipmaker increased its share in the NAND market after it acquired a NAND flash unit of Intel last year.

It was the second-largest seller of the product in the second quarter, with a 19.9 percent market share, according to market tracker TrendForce, overtaking Kioxia, the long-time No. 2.

Samsung Electronics had 33 percent of the market, down 2.3 percent from the previous quarter.

SK hynix conceded that the investment comes as the prices of chips are on a steep decline due in part to a supply glut of electronic devices, including appliances, televisions and smartphones.

"Demand for memory chips is rapidly falling in the wake of the global economic slowdown and due to the instability of the supply chain, but experts foresee that the business will start to recover steadily from 2024 and rebound in 2025 as the memory business cycle is increasingly getting less volatile in recent years," it said in a statement.

Its decision to postpone its M17 plant expansion remains unchanged.

The board of SK hynix put the expansion on hold in June due to geopolitical tensions, inflation and a slowdown in consumer demand.

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