SK Hynix, Three Scenarios for Foundry Expansion

Expansion of Facility Investment at Cheongju Plant
Possibility of M&A with Domestic and Foreign Companies
Joint Investment with Clients and New Companies

[Asia Economy Reporter Su-yeon Woo] SK Hynix has announced plans to double its foundry production capacity, drawing attention to specific expansion measures. Various strategic options such as domestic expansion, mergers and acquisitions (M&A) of domestic and foreign companies, and establishing new foundry companies are being discussed, with the industry placing more weight on the possibility of expanding domestic factories or acquiring domestic foundry companies.

On the 13th, Park Jung-ho, Vice Chairman of SK Hynix, stated at the ‘K-Semiconductor Strategy Presentation Conference’ held at Samsung Electronics’ Pyeongtaek Campus, "To prepare for global semiconductor supply instability, we are considering securing an 8-inch foundry production capacity at twice the current level, including domestic expansion and M&A." Additionally, SK Hynix announced investment plans of KRW 110 trillion for the Icheon and Cheongju plants by 2030, and KRW 120 trillion for the Yongin cluster over 10 years starting from 2025.

SK Hynix Headquarters in Icheon, Gyeonggi-do
[Image source=Yonhap News]

This foundry production capacity expansion is interpreted as a commitment to resolving the recently critical supply issues of automotive semiconductors. It aligns with SK Group’s emphasis on ‘social value’ by aiming to stabilize the domestic supply chain and support the production and development of domestic fabless companies.

The focus now shifts to how SK Hynix will increase facility investments. The easiest method is to increase investment in domestic factory facilities. Currently, SK Hynix is relocating production equipment from its Cheongju plant to its Wuxi plant in China to expand production capacity at the local plant where there is demand for 8-inch wafers. If SK Hynix strengthens cooperation with domestic fabless companies in line with this policy direction, there will be a need to add production plants tailored to domestic customers. Therefore, the Cheongju plant could be a candidate for expansion.

Another option is acquiring domestic or overseas semiconductor companies. In this case, domestic foundry companies such as Key Foundry and DB HiTek, or overseas companies like the Dutch semiconductor firm NXP, are candidates. However, considering the policy of strengthening cooperation with domestic fabless companies, the possibility of acquiring overseas companies seems low. Previously, SK Hynix has conducted major M&As such as investing in Kioxia and acquiring Intel’s NAND business. The recent appointment of ‘M&A expert’ Park Jung-ho as CEO of SK Hynix alongside SK Group’s governance restructuring is also interpreted as a preparatory step for M&A.

Meanwhile, some in the industry have proposed a scenario of establishing a new foundry company through joint investment by customer companies. In the case of Japanese automotive semiconductor company Renesas, a public-private fund established by major customers such as Toyota, Nissan, and Canon operates as the major shareholder. However, the prevailing view is that it would be realistically difficult for domestic conglomerates to unite and invest as one.

This content was produced with the assistance of AI translation services.