Hynix to Invest $3.1 Billion in New Fab

SK Hynix plans to spend about $3.1 billion to build a new DRAM fab at the its headquarters in South Korea, the company said Friday.

Construction of the new 170,000-square-foot facility is expected to begin later this year and be completed by October 2020, SK Hynix said. The company said the fab's production portfolio would be decided at a later time, factoring in future market conditions and its technology capabilities.

The announcement of a new fab comes amid a major boom in semiconductor memory that has lasted for more than two years. Based on increasing demand and tight supply, the DRAM market grew by 76% last year. Handel Jones, CEO of International Business strategies, predicts that the DRAM market will grow by another 33% this year and eclipse the $100 billion mark for the first time in 2019.

SK Hynix said it also continues to expand its production capacity with at its massive M14 fab at the company's headquarters in Icheon in South Korea's Gyeonggi Province and its fab in Cheongju in central South Korea. It is also expecting to complete in the second half of this year the expansion of its cleanroom space at its fab in Wuxi, China, the company said.

SK Hynix' M14 fab in Icheon, billed as the largest in the world, is about 170,000 square feet and capable of producing about 200,000 wafers per month, according to the company.

Source: SK Hynix

Despite the flurry of activity already underway, SK Hynix said it is "essential to make additional investments in order to meet growing memory demand." As chip making equipment gets larger, it is also important to secure enough cleanroom space in advance of production, the company said.

The new fab was announced one day after SK Hynix reported strong second quarter results, with sales of about $9.2 billion, an increase of 19% sequentially and 55% year-over-year. The company's second quarter net income of about $3.9 billion was up 39% sequentially and 75% year-over-year.