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SK Hynix plans to invest US$38.9 billion in new memory plants

Lucas Mearian | Aug. 27, 2015
The investments in new memory will largely go toward 3D NAND.

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Hynix DDR4 chips, memory modules and a wafer. Credit: S.K. Hynix

SK Hynix, the world's second-largest memory chip maker, announced that it plans to invest $38.9 billion to build three new semiconductor fabrication plants by 2024.

South Korea-based SK Hynix's proposed investment tops other deals by semiconductor giants, such as Intel and Tsinghua Unigroup Ltd.

Intel recently announced it was spending $16.7 billion to acquire Altera, a maker of field-programmable gate arrays. Samsung Electronics announced last year it was investing $14.4 billion to build a new semiconductor manufacturing facility near Pyeongtaek, South Korea.

Hynix said the investment is about being the "first one to prepare" for future NAND flash and DRAM demands. The company believes the investment will help to make it the world's largest semiconductor manufacturer. Currently, Taiwan-based TSMC is the largest maker of logic chips and is the biggest manufacturer of DRAM and NAND flash memory chips.

Hynix's global market share for DRAM shipments was 27.6 percent at the end of March, making it the second largest after Samsung, which has 44.1 percent.

SK Group Chairman Chey Tae-won made the announcement during a dedication ceremony for one of the new chip plants in Icheon, about 50 miles southeast of Seoul. The ceremony was attended by South Korean President Park Geun-hye.

"It is a sizable amount of spending, but spread over 10 years," said Joseph Unsworth, Gartner's research vice president in charge of semiconductors, NAND flash and sold state drives. "I would say that Hynix thinks it needs that much to remain competitive, but the challenge always is the rate of spending for the industry."

Unsworth pointed to other leading semiconductor makers, such as Micron, Toshiba, SanDisk and Samsung, which are all planning new fabrication plants for DRAM and NAND. Most of the fabs are being built to support 3D NAND, which stacks layers of flash one atop the other like a microscopic skyscraper in order to get greater density.

"That's a lot of new capacity coming online in a relatively concentrated period," Unsworth said in an email response to Comptuerworld.

It is also important to note, Unsworth added, that all of the new fabrication plant spending is "planned, and plans can change of course based on profitability and then the demand outlook."

In its July financial earnings report, Hynix stated that it will increase the production ratio of triple-level cell (TLC) NAND flash chips and develop 36-layer 3D NAND flash "to gear up for small-scale mass production of it within the third quarter."

Additionally, the company plans to complete the development of 48-layer TLC 3D NAND flash within this year to prepare for its adoption in NAND products, including SSDs, "to meet with upcoming market demand of 3D NAND."


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