SK Hynix plans to spend $ 107 billion to build four chip factories

SEOUL (Reuters) – South Korea's SK Hynix Inc. announced on Thursday that it would spend $ 107 billion on the construction of four factories, the memory chip maker seeking to maintain its competitiveness against Chinese efforts to become a major manufacturer of chips.

The chip manufacturing plants will be built on a 4.5 million square meter site south of Seoul from 2022, in addition to two existing national plants that will receive a separate investment of 55 trillion won (49 billion dollars) over the next decade.

Projects for next-generation DRAM and chip plants are coming as chip makers gear up for increased demand to power new technologies, such as fifth-generation (5G) communications artificial intelligence, even if the slowdown in smartphone sales cancels it. a two-year flea boom.

"Although the demand for chips for autonomous cars is no longer sufficient, I think the demand for autonomous vehicles will be much greater in the next 10 years, or as early as 2023 or 2024," said badyst Kim Young. -gun of Mirae Asset. Daewoo.

"This will create increased demand for chips for SK Hynix," as will marketing 5G networks over the next few years, Kim said.

The plan also intensifies the arms race between South Korea, the world's largest exporter of memory chips, and China, which strongly encourages investment in chip manufacturing to reduce import dependence. in the wake of trade with the United States.

China is the world's largest consumer of chips, worth $ 270 billion in 2017, more than its total crude oil imports.

SK Hynix said that the investment plan, subject to the approval of local authorities, will bring together more than 50 domestic and foreign suppliers at the Yongin site, 40 km from the capital.

The chip maker, which owns a third plant in the Chinese city of Wuxi, said it had not yet determined the increase in production capacity.

"This is a long-term investment plan and our strategy may change depending on market conditions," spokesperson Olivia Lee told Reuters.

SK Hynix shares rose 1.5%, while shares in Samsung Electronics Co Ltd, which announced a new smartphone on Wednesday, were virtually unchanged.

SK Hynix was a member of a consortium led by American private equity firm Bain Capital, which had acquired much of Toshiba Corp's memory chip business. Last year. On Wednesday, people close to the case told Reuters Bain that the banks were selected to manage an initial public offering of Toshiba Memory in September.