SK hynix won't be importing neon gas from 2024 as it ups localization of fab materials

South Korea’s SK hynix Inc., the world’s second-largest memory chip maker after Samsung Electronics, is spurring efforts to achieve a 100 percent localization of neon gas by 2024 in cooperation with local gas producers for stable chip manufacturing.

Currently about 40 percent of neon gas, critical for laser gases to make chips, is supplied from Korean makers, but SK hynix plans to increase the ratio of local neon gas supply to 100 percent by 2024, it said Wednesday.

Korean chipmakers rely heavily on imports for neon gas supply, but the ongoing Russia-Ukraine war since the beginning of the year has made it difficult for them to stay on the current supply chain.

According to the Ministry of Trade, Industry and Energy, Korea imported 23 percent of neon gas from Ukraine and 5 percent from Russia last year. Amidst worsening geopolitical risk in the region, the price of neon gas imports from China spiked to $2.28 million per ton in the second quarter from the average $350,000 per ton in the first quarter.

SK hynix has joined forces with domestic chip gas producers TEMC and POSCO to localize the gas supply. Instead of building a large-scale air separation unit for neon gas collection with massive investment, the three have developed a technology to produce the gas from existing facilities.

POSCO produces neon gas, and TEMC processes it to supply to SK hynix.

The Korean chipmaker has applied locally produced neon gas to its chip manufacturing line since April, replacing 40 percent of its gas use with domestic supply. It now is aiming to up the ratio to 100 percent by 2024.

On top of neon gas, krypton and xenon gas for the etching process will also be localized by June next year. Korea imported 31 percent of krypton gas from Ukraine and 17 percent from Russia last year, while relying 18 percent of xenon gas on imports from Ukraine and 31 percent on those from Russia.

“Cooperation with domestic partners has helped stabilize the supply. The company will strengthen chip materials supply chain with continuous cooperation,” said Yoon Hong-sung, vice president and head of fab materials procurement at SK hynix.

Samsung Electronics Co. also is actively seeking to replace neon gas imports with local supply with procurement from POSCO. It reportedly is working on additional investment to improve the localization ratio of necessary gases.

SK hynix shares closed 0.11 percent higher at 89,900 won ($63.77) in Seoul trading on Thursday.

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