SK Hynix Sells 1 Trillion KRW Water Treatment Center to Secure Investment Funds (Comprehensive)

Securing 1 Trillion Won in Assets by Selling Water Treatment Center
Focusing on Asset Acquisition Using Various Means
Preparing for Boom with Investment in DDR5 and HBM Production

SK Hynix will secure around 1 trillion KRW in cash assets by selling its water treatment center, a purification facility for its semiconductor factory. Amid deteriorating earnings, the company is raising funds to improve financial soundness and secure investment funds for future preparedness. The company has announced that it will not spare investments necessary for producing high value-added products in anticipation of the upcoming boom period.

On the 10th, SK Hynix announced that it will sell the water treatment center located on its Icheon campus in Gyeonggi Province to SK REITs. "Recently, as global semiconductor industry capital expenditures (Capex) have increased, there is a growing trend to improve financial soundness through asset securitization," and "we plan to promote the securitization of the non-core asset, the water treatment center," it said.

SK REITs submitted an application for approval related to this transaction to the Ministry of Land, Infrastructure and Transport on the same day. Both companies plan to pass the board of directors' resolution this month. Once government approval is obtained, the sale price will be finalized, and the asset transfer procedure will be completed in the second half of the year. SK Hynix plans to lease and use the facility from SK REITs after the sale of the water treatment center.

In the semiconductor industry, it is expected that SK Hynix will be able to secure around 1 trillion KRW in cash assets through this sale. It is also evaluated that this will help improve financial soundness while alleviating difficult financial conditions.

As of the end of last year, SK Hynix's cash assets stood at 6.4 trillion KRW, down about 2.3 trillion KRW compared to the end of the previous year. By the end of the first quarter, the amount further decreased to 6.14 trillion KRW. Borrowings, including interest expenses, amounted to 28.76 trillion KRW as of the end of the first quarter, an increase of 5.76 trillion KRW compared to the end of the previous year.

In this situation, SK Hynix is focusing on securing funds through various means. Earlier, SK Hynix issued 1.6949 trillion KRW in corporate bonds in the first quarter and 2.2377 trillion KRW in exchangeable bonds (EB) in the second quarter. Recently, it also received a loan of 200 billion KRW from Hana Bank.

SK Hynix is enhancing financial stability through fund procurement and investing in preparation for a future boom. In particular, investments will focus on products with increasing demand such as Double Data Rate (DDR)5, Low Power DDR (LPDDR)5 DRAM, and High Bandwidth Memory (HBM). Although this year’s CAPEX investment is planned to be reduced by half compared to last year, investment in high value-added products will continue without change.

Earlier, Kim Woo-hyun, SK Hynix’s Chief Financial Officer (CFO), said in the first quarter conference call, "Investments for the production of products leading demand growth this year, such as DDR5, LPDDR5, and HBM3 (4th generation HBM products), will be executed as planned to prepare for the market in the second half of this year and next year," adding, "We will make thorough preparations to respond quickly when market conditions improve."

The market expects that since all memory manufacturers, including SK Hynix, have started production cuts, the effects will be seen in the third quarter. As the negative growth trend slows, there is also speculation that the memory industry, including SK Hynix, could return to profitability next year.

SK Hynix will announce its second-quarter earnings on the 26th. According to FnGuide, a financial information provider that aggregates securities firms’ forecasts, the average sales estimate for SK Hynix in the second quarter is 6.1009 trillion KRW. Operating loss is expected to be 2.5945 trillion KRW, indicating a reduction in operating loss compared to the first quarter (3.4023 trillion KRW).

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