SK Hynix is set to make a massive investment of approximately 54 trillion won to expand its cutting-edge artificial intelligence (AI) memory production facilities in Yongin and Cheongju. The company plans to optimize its assets by selling its less profitable production line in Chongqing, China, while enhancing its capacity to meet the growing demand for high-bandwidth memory (HBM) and next-generation NAND flash.
According to industry sources, SK Hynix's board recently approved new investments totaling around 54.3 trillion won, including 35.2 trillion won for the Yongin Semiconductor Cluster Phase 2 fab (Y2) and 19.1 trillion won for the Cheongju M17 fab. This move marks the beginning of the company's long-term expansion plan announced at the end of June, aimed at timely securing production capacity to meet the surging global demand for AI memory.
The core of this domestic investment is the establishment of a next-generation AI memory base. Construction of the Yongin Y2 fab, which will cover an area of 112,727 square meters (approximately 34,100 pyeong), is set to begin in July 2024, with the first cleanroom expected to be operational by 2029. SK Hynix envisions the Yongin Y2 fab as a leading facility for producing advanced HBM and next-generation DRAM in the global market. Similarly, the Cheongju M17 fab, which will also begin construction in February 2024, aims to open its cleanroom by the end of 2028, establishing a premium NAND line.
At the same time, the company is pursuing asset optimization, including the sale of its packaging plant in Chongqing. According to reports from Bloomberg and other outlets, SK Hynix is in discussions with Chinese funds and local semiconductor companies regarding the sale, which is estimated to be valued at around $3 billion (approximately 4 trillion won).
The Chongqing plant, which began mass production in July 2014, has served as a post-processing hub for general-purpose NAND flash packaging. However, due to declining production competitiveness and operational inefficiencies, the company has initiated a restructuring of its general-purpose lines in China. It plans to reduce fixed costs by outsourcing semiconductor packaging and testing (OSAT), thereby improving overall production efficiency.
Industry analysts view this significant domestic investment as a move to strengthen the advanced semiconductor ecosystem centered in South Korea. This shift away from expanding overseas production facilities for cost-cutting purposes reflects a trend toward 'value chain solidification,' focusing on technology protection and supply chain stability. The collaboration with the government, local authorities, and domestic materials and parts companies to establish a testbed within the Yongin cluster is also seen as an extension of efforts to enhance the domestic ecosystem.
As the AI memory market intensifies competition for timely supply capabilities, the importance of securing proactive infrastructure has grown. This investment aims to maximize market responsiveness by accelerating fab construction and cleanroom availability in line with rising memory demand from big tech companies.
Ahn Gi-hyun, executive director of the Korea Semiconductor Industry Association, stated, "In a situation where uncertainties in the global supply chain are increasing, focusing on advanced domestic bases is an inevitable choice. This will further strengthen the competitiveness of the domestic semiconductor ecosystem centered around Yongin and Cheongju."
* This article has been translated by AI.
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