SK Hynix Separates Its Foundry Business Department and Establishes It as SK Hynix System IC

Apr 27, 2017

SK Hynix is separating its Foundry Business Department as an independent subsidiary.
Foundry is a business that does consignment production for outside customers’ semiconductors. SK Hynix’s intention is to increase its competitive edge in foundry business by strengthening responsibility management system in it. SK Hynix is going to focus on its own semiconductor brand that includes DRAM, NAND flash memory, and high-pixel image sensor.
According to industries on the 26th, SK Hynix made such decision early this year and carried out a briefing session for employees of Foundry Business Department on the 18th. It has decided to call the name of a new subsidiary as ‘SK Hynix System IC (tentative name)’ and 200mm wafer facility (M8) that is located in Cheongju and various facilities will be included as an early asset. There are currently about 1,000 employees under Foundry Business Department who are working for either production or normal office job. After a board of directors meeting, SK Hynix is going to establish a subsidiary, which 100% of its shares are owned by SK Hynix, on the 1st of July.
It is heard that a president within SK Group is nominated to be the first CEO of SK Hynix System IC and that executives from manufacturing and marketing businesses including Director Lee Dong-jae of Foundry Business Department will move to this new subsidiary.
SK Hynix has established a task force that will be responsible for practical affairs regarding separation of Foundry Business Department from SK Hynix.
M8’s production capability is about 100,000 sheets based on introduction of 200mm wafers and major items that it produces are CMOS Image Sensor (CIS), Display Driver IC (DDI), and PMIC (Power Management Integrated Circuit). Its biggest customer is LG Group’s fables company called Silicon Works. Silicon Works’ DDIs that are produced from M8 are used for LG Display’s LCD panels. PMIC is carrying out consignment production of products from South Korean fables company called Silicon Mitus. CIS, which is one of major items that are produced, is sold as SK Hynix brand. However SK Hynix will continue to take charge of production of high-pixel products over 13-mega pixel that will be mass-produced from M10, which is a 300mm wafer facility, starting from second half of this year.
According to a market research company called IHS Market, SK Hynix’s Foundry Business Department made about $140 million in sales last year and this does not even equal to 1% of SK Hynix’s entire sales last year ($15.2 billion (17.1980 trillion KRW)). It was a loss based on profit index.
SK Hynix is breaking its best quarterly performance every quarter due to recent booming of memory markets and this has every executives and employees from Memory Business Department ecstatic. However Foundry Business Department is considered as ‘minor’ and does not even receive that much support from SK Hynix.
“SK Hynix’s decision to separate Foundry Business Department including M8 is its intention to increase competitive edge by strengthening authority and responsibility.” said a representative for an industry. “Because 200mm foundry industries are in a situation of lack of supplies due to recent expansion of IoT (Internet of Things) markets, it will be possible for Foundry Business Department to take a huge jump if it succeeds in reducing fixed costs, developing processes, and expanding its customers.”
SK Hynix System IC has established a plan to develop new foundry production processes for fingerprint recognition sensor IC (Integrated Circuit) that has its demands increase rapidly recently and force touch-chip.
Staff Reporter Han, Juyeop | powerusr@etnews.com

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