SK Hynix is planning to increase amount of facility investment for this year by 37% compared to its initial plan in order to not lose opportunities from booming of memory markets.
SK Hynix publically announced on the 26th that it will invest $8.61 billion (9.6 trillion KRW) into facilities this year and confirmed its plan at a board of directors meeting held on the same day. This amount is increased by 37.1% from $6.28 billion (7 trillion KRW) which is amount of its facility investment announced early this year. Compared to amount of last year’s facility investment ($5.64 billion (6.29 trillion KRW)), it is increased by whopping 52.6%.
Reason why SK Hynix decided to increase amount of its facility investment for this year is because it has decided to push forward timing of completion of new plants.
“We are currently looking into pushing forward timing of completion of our new plants in Wuxi, China (DRAM) and Cheongju (NAND flash) from first half of 2019 to fourth quarter of 2018.” said Department Head (Executive Director) Lee Myung-young of SK Hynix Financial Planning Headquarters at a conference call that was held right after announcement of SK Hynix’s second quarter performance held on the 25th. SK Hynix is planning to push forward timing of completion by about 6 months.
SK Hynix announced that there will not be any sudden increase in supplies even when it completes construction of its new plants. It is likely that production capacities of both DRAM and NAND flash will increase by only 3 to 5%.
“Increase in total production capacity will be limited if we recover loss of output of memories that is caused by increase in number of steps, which is due to upgrade in technologies.” said a representative for an industry.
Stock industries are estimating that SK Hynix’s operating profit in 2017 will exceed $9.87 billion (11 trillion KRW). If SK Hynix uses $8.61 billion (9.6 trillion KRW) into facility investment, it is as if it is reinvesting most of profits it earned right back into facility investments.
“Increment in production of chips is not the same as the past as amount of investments has increased due to limitations in technologies that make semiconductors smaller and even if when a process is refined by one generation.” said an expert in a semiconductor industry. “This is the reason why amount of supplies is not keeping up with demands even though amount of investments is at its highest point ever.”
It is expected that rear-end industries such as equipment manufacturers will receive great benefits as SK Hynix adjusted amount of this year’s investment by upward. Some of the companies that will be benefiting are Jusung Engineering, TES, Eugene Tech., UniTest Inc., LOT Vacuum, KC Tech., Hanmi Semiconductor, UNISEM, and PSK.
Staff Reporter Han, Juyeop | powerusr@etnews.com