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Foundry expansion

SK Hynix mulls foundry expansion, advances capex to ease chip shortage

By Apr 28, 2021 (Gmt+09:00)

Workers at a SK Hynix chip plant in Icheon
Workers at a SK Hynix chip plant in Icheon

SK Hynix Inc., the world’s second-largest memory chipmaker, said on Wednesday that it is looking into various options to grow its foundry business and will advance its 2022 capital expenditure plans to the second half of this year to alleviate the global chip shortage.

The announcement comes after the South Korean chipmaker posted strong first-quarter results on the back of growing memory demand from makers of PCs, smartphones and servers.

Its net profit in the three months to March stood at 992.6 billion won ($894 million), up 53% from 649 billion won in the year-earlier period, the company said in a regulatory filing.

Operating profit on a consolidated basis rose 66% on the year to 1.32 trillion won, while revenue climbed 18% to 8.49 trillion won.

Compared with the fourth quarter of 2020, its operating profit surged 37%, while sales increased 6.6%.

The first-quarter results were largely in line with market expectations.


The company is optimistic about the market outlook for the rest of the year and said DRAM and NAND memory demand for consumer electronics, autos and technology gear will continue to grow, resulting in a supply shortage.

“We expect our (chip) inventory to remain tight throughout the year. The situation will be particularly severe in the second half of this year," SK Hynix's Chief Financial Officer Kevin Noh told analysts during a conference call.

Hynix's next-generation DDR4 DRAM chip
Hynix's next-generation DDR4 DRAM chip

In the DRAM sector, SK Hynix said it plans to start supplying a high-capacity multi-chip package (MCP) based on 12-gigabyte (GB) DRAM products in the second quarter and increase the production of its third-generation 10-nanometer DRAM products.

The company also plans to mass produce fourth-generation 10 nm products using advanced extreme ultraviolet (EUV) equipment by the end of this year.

For NAND flash, SK Hynix said it will increase the 128-layer product mix to boost sales of enterprise solid-state drives (SSDs) and aims to mass produce 176-layer products by year-end.


During the conference call, SK Hynix said it is reviewing the possibility of expanding its 8-inch wafer foundry business to help alleviate the global chip shortage. However, it said it is not expanding facilities to include 12-inch wafers.

SK Hynix is operating its foundry business through its subsidiary SK Hynix System IC, which is in the middle of moving its 8-inch wafer facilities from its Cheongju plant in Korea to Wuxi, China, close to the parent company’s NAND flash factory.

Chipmakers around the world, from Intel Corp. to top foundry player Taiwan Semiconductor Manufacturing Co. (TSMC), have pledged billions of dollars of investment in response to growing demand but many have cautioned that tight supplies will likely continue into next year.

SK Hynix, which counts Apple Inc. among its customers, said it is moving some of its 2022 capital expenditure into the second half of this year in order to build more chipmaking equipment. However, an actual increase in production will likely happen next year, it added.

SK Hynix mulls foundry expansion, advances capex to ease chip shortage


The chipmaker hinted that it may sell part of its stake in Kioxia Holdings Corp. when the Japanese semiconductor firm goes public in the second half of this year.

Back in 2018, SK Hynix invested about 4 trillion won ($3.55 billion) in Kioxia through a consortium led by US private equity firm Bain Capital. Of the investment, 1.3 trillion won was used to buy convertible bonds worth a 15% stake in the Japanese firm.

SK Hynix executives said on Wednesday the company plans to sell its Kioxia stake held as a limited partner of the Bain consortium in the market once Kioxia is listed, while keeping the 15% stake it directly purchased to maintain a strategic partnership with the Japanese firm.

The possibility of SK Hynix disposing of part of its Kioxia stake emerged after the Wall Street Journal reported earlier this year that Micron Technology Inc. and Western Digital Corp. are considering buying the Japanese chipmaker, currently the world’s No. 2 NAND player, for about $30 billion.

Write to Su-Bin Lee at

In-Soo Nam edited this article.

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