SK hynix secures funding with gov’t low interest loans

SK hynix Inc.’s headquarters, located in Icheon, Gyeonggi-do. [Photo by Yonhap]

SK hynix Inc. has secured hundreds of billions of won from a government low-interest loan program for the chip industry.

The Korea Development Bank (KDB) said on Tuesday that its low-interest loan program to support investment in semiconductor equipment was offered to 22 domestic chip-related companies, with 1.1 trillion won ($820 million) spent to date. SK hynix was among the beneficiaries, securing an amount in the hundreds of billions of won.

The company makes significant investments in equipment each year, spending 5.97 trillion won on equipment investments in the first half of 2024 alone, more than double the 2.7 trillion won spent in the same period during the previous year.

“SK hynix likely applied for this loan program because of its growing equipment investment needs and the better interest rates compared to other financial institutions,” a financial industry insider said.

The KDB loan program was developed as part of the South Korean government‘s comprehensive support plan for the semiconductor ecosystem. The total loan amount is 2 trillion won, with an additional 900 billion won available for future loans.

The key feature of the program is to provide low-interest loans through interest rate reductions. Small and medium-sized enterprises (SMEs) and middle-market companies in urgent need of financing can receive interest rate reductions of 1.2 to 1.5 percentage points, while large companies can benefit from reductions of 0.8 to 1.0 percentage points.