SK Promotes 'Semiconductor Production Cut Reduction'... "Will Consider Changes in Q1"

President Kwak No-jeong Reveals at CES 2024 Conference
"Maximizing Production of High-Demand DRAM Products"
"Challenging Market Cap of 200 Trillion Won Within 3 Years"

Kwack No-jeong, President of SK Hynix, stated, "There are signs that the DRAM market is recently improving, so we will naturally maximize production of products with high demand and adjust those with weak demand," adding, "We are considering changes in the first quarter." This is notable as a semiconductor CEO has expressed a specific view on the timing of ending production cuts.

On the 8th (local time), Kwack held a media conference at CES 2024, the world's largest electronics and IT exhibition held in Las Vegas, USA, and responded this way when asked about the 'end of production cuts.'

Kwak No-jeong, President of SK Hynix, is speaking at a media conference on the 8th (local time), the day before the opening of 'CES 2024,' the world's largest home appliance and IT exhibition held in Las Vegas, USA.
[Photo by SK Hynix]

The mention of the possibility of ending production cuts is interpreted as a sign of confidence due to the rapid recovery of the semiconductor market recently. In particular, DRAM prices have been on an upward trend lately. Market research firm TrendForce forecasted that mobile DRAM prices will rise 18-23% and PC DRAM prices 10-15% in the first quarter of this year compared to the previous quarter. This is a 10 percentage point increase from the previous forecast of 8-13%. Both general-purpose PC DRAM and NAND flash general-purpose products for memory cards and USB have shown a rising trend for three consecutive months since October last year. Market research firm Omdia also predicted an 11% increase in DRAM prices in the first quarter of this year.

Not only recovery but also the possibility of entering a supply shortage phase for DRAM this year is being anticipated. Chinese smartphone original equipment manufacturers (OEMs) are increasing purchases of mobile memory semiconductors to secure inventory at competitive prices.

Accordingly, SK Hynix is expected to raise DRAM utilization rates in the first quarter of this year. It is already known that SK Hynix expanded the utilization rate of its largest DRAM production base, the Wuxi plant in China, to around 75-80% by the end of last year.

Competitors Samsung Electronics and Micron also appear to be normalizing DRAM supply. Samsung Electronics is reportedly increasing wafer input mainly for 1Zn (10nm class) at its 16 and 17 lines in Hwaseong, Gyeonggi Province, and P2 and P3 lines in Pyeongtaek. Samsung is estimated to reduce the scale of production cuts from 35% to about 15% within the first quarter. U.S.-based Micron is also said to have started expanding DRAM wafer input in the fourth quarter.

However, NAND, which has relatively higher inventory levels compared to DRAM, intends to maintain production cuts. Kwack said, "NAND is improving relatively slowly, but it seems to be escaping the worst situation. We will operate by differentiating by product while monitoring the market," adding, "We will decide by applying the same principles as DRAM after observing the market situation in the mid-term, such as the second or third quarter."

Meanwhile, at this event, Kwack stated, "Memory plays a core role in data processing in the AI era," and "We are preparing a customer-tailored memory platform unique to SK Hynix." This shows the company's intention to actively respond to the diverse customer demands in the AI era. He said, "We will continue innovation with next-generation interfaces such as CI (Compute Express Link) for efficient use of high-performance computing systems and QLC (Quad-Level Cell) storage, which is suitable for high-capacity implementation."

He also expressed ambition to significantly increase market capitalization based on favorable performance prospects. Kwack emphasized, "If we prepare the products currently in production well, maximize investment efficiency, and maintain financial soundness, I believe it is worth challenging a market capitalization of 200 trillion won within three years from the current market capitalization of about 100 trillion won."

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