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SK Hynix to invest $17.7bn in new flash memory plant

Facility will boost NAND chip output by 40%

An SK Hynix plant in South Korea. The chipmaker is investing in a new flash memory production facility to meet expected strong demand. (Photo courtesy of SK Hynix)

SEOUL -- South Korean chipmaker SK Hynix opened a new production line for NAND flash memories on Thursday, part of a 20 trillion won ($17.7 billion) investment in anticipation of long-term growth in demand.

The investment comes in response to expanding demand for NAND flash memories as storage media for servers. It will boost SK Hynix's NAND flash memory production capacity by about 40% in 2023 or later, compared with current levels.

Although flash memory prices have clearly declined since the beginning of the year, SK Hynix has decided to make the large-scale investment as it expects demand to continue to grow in the medium to long term.

The investment also comes as China, which currently has no output, is aggressively pushing into the sector. The country's state-backed front-runner Yangtze Memory Technologies is building a $24 billion project in the Chinese city of Wuhan. The new site is scheduled to begin mass production by the end of next year and through 2020.

SK Hynix is the fifth-biggest player in the global flash memory market. Compatriot rival Samsung Electronics is the world leader in the sector, followed by Japan's Toshiba.

But SK Hynix has the second-biggest share of the global market for DRAM memory, which is used for temporary storage. Both DRAM and NAND flash are key memory chips which are used in all kinds of electronic devices ranging from PCs, smartphones, connected cars and data centers.

The planned 20 trillion won investment is part of SK Hynix's efforts to enhance its competitiveness in the global flash memory market, which pales before its competitiveness in the global DRAM memory market.

SK Hynix on Thursday began operating the new plant near its Cheongju facility in North Chungcheong Province.

The company plans to inject more funds into the plant over the next five years while assessing market conditions, a company official said.

The plant is projected to have a monthly production capacity of around 200,000 300mm silicon wafers.

SK Group Chairman Chey Tae-won and South Korean President Moon Jae-in attended the completion ceremony.

Moon told the attendees, "The government will support the company so that it can invest at the appropriate time."

Chey said, "We will continue to grow and take on challenges so as to be able to lead the semiconductor industry."

Cheng Ting-fang, Nikkei staff writer in Taipei contributed to this story.

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