SK Hynix to begin construction on $106 billion semiconductor fabrication complex

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South Korea Earns SK Hynix

SK Hynix received approval from the South Korean government to start building a ₩120 trillion ($106.5 billion) semiconductor fabrication cluster in-country later this year. The company will task the new facility with producing high-performance DRAM for application in personal computing, servers, and mobile devices.

Once fully operational, the sprawling facility will produce 800,000 wafer starts per month (WSPM).

The fab’s launch will make the worldwide memory chip segment more diverse and resilient.

Details on SK Hynix’s New Fab

The world’s second-largest memory module manufacturer is establishing its new 44.6 million square foot complex in Yongin, South Korea. The site will house four different plants, which will be equipped with extreme ultraviolet lithography (EUV) machines.

Those tools will allow the firm’s engineers to fabricate leading-edge chips with remarkable transistor density and low power consumption.

The Korea Herald reports 50 SK Hynix suppliers and subcontractors are moving into the Yongin area to support the facility. The chipmaker intends to break ground on the cluster in the fourth quarter of this year. It aims to begin fabricating DRAM products in one of its four factories by 2025.

The South Korean Ministry of Trade, Industry, and Energy vowed to help the corporation complete its foundry initiative.

A Long and Expensive Process

SK Hynix will become a more competitive provider once its Yougin complex goes online. The site will enable the firm to substantially increase its output and bring its latest innovations into mass production with greater speed. But its size and focus make it a significant long-term investment for the company.

The corporation is investing major capital to build a complex twice the size of the Indianapolis Motor Speedway. It is also making a massive expenditure to equip the facility with state-of-the-art machinery. ASML Holdings charges around $120 million for each of its EUV systems, which are shipped in 40 freight containers.

Because of the construction and transportation times involved, it cannot quickly upgrade its production capacity. That means its new complex might not be operational in time to relieve the current global chip shortage.

Nevertheless, SK Hynix is smart to bolster its manufacturing infrastructure as its sector is becoming increasingly competitive. Other large semiconductor manufacturers have unveiled roadmaps that include significant production capacity upgrades.

Memory Chip Segment Competition Increasing

Samsung intends to build a $17 billion fab in Austin, Texas to serve its U.S.-based clients better. The market-leading conglomerate also wants to spend $9.93 billion to outfit the complex with EUV etching tools to produce 3nm components. The plant would expand its presence in Central Texas by 7 million square feet.

In addition, Intel indicated it plans to reassert its position as the world’s foremost IDM. The firm is executing that strategy by spending $20 billion to establish two new fabs in the United States. That initiative coincides with its recent launch of several new memory products for service providers, enterprises, and consumers.

Given how the global landscape is changing, SK Hynix’s decision to expand its production resources is shrewd.

In addition, more infrastructure investments in the memory component segment are a positive development for OEMs worldwide. With more foundries available, manufacturers will be less susceptible to disruptive events like the global chip shortage. Greater competition between providers will also result in more rapid technological development and better pricing.

Major chipmakers diversifying and enhancing their production capacity is emerging as the best semiconductor industry trend of 2021.

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