ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintIcon Twitter
Technology

SK Hynix to move chip facilities to China to meet rising demand

South Korean company's profit soars 84% last year on memory chip boom

An SK Hynix employee leaves its offices in Seongnam, South Korea. The company forecasts better performance this year because demand for memory chips for 5G smartphones is expected to double.   © AP

SEOUL -- Chipmaker SK Hynix said on Friday that it will move some foundry facilities using 8-inch wafers from South Korea to China as soon as possible to meet rising customer demand and reduce costs.

South Korea's No. 2 semiconductor company said it expects demand for foundry chips based on 8-inch wafers will remain strong for some time, as the supply of chips using more advanced 12-inch wafers is limited due to the amount of investment required to build new facilities.

"We plan to move 8-inch wafer facilities to China, where cost-saving is expected, to seize the chance fully," the company said at its fourth-quarter earnings conference call. "Initially we planned to do it in two years, but we changed the plan to do it as soon as possible to cope with rising customer demand."

The announcement comes as global companies, including Apple and rival Samsung Electronics, shift production out of China to Vietnam and India to diversify their supply chains and production lines amid the U.S.-China trade war.

SK Hynix said it is in a different situation from its peers because all of its overseas facilities are in China.

"For us it is better to add more facilities in China, as we have no overseas factories outside of the country," the company said.

The company's operating profit jumped 84% to 5 trillion won ($4.5 billion) last year thanks to rising demand for memory chips, with revenue jumping 18% to 31.9 trillion won. Its net income soared 137% to 4.8 trillion won during the same period.

In the fourth quarter alone, Hynix's operating profit quadrupled to 966 billion won year-on-year thanks to strong demand for mobile chips. Its revenue increased 15% to 7.9 trillion won during the same period.

Hynix forecast that its performance will be even better this year because demand for memory chips for 5G smartphones is expected to double now that Apple has joined Samsung and Huawei Technologies in producing 5G handsets. "We expect 5G smartphone [sales] will double this year, and artificial intelligence and virtual reality devices will also grow. Corporations are also accelerating their digital transformation. So we believe memory demand will grow," an SK Hynix executive said in the conference call.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends October 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to Nikkei Asia has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more