Friday, July 20, 2018
SK Hynix to Build Foundry Factory in China
Part of ‘China Insider’ Strategy
SK Hynix to Build Foundry Factory in China
  • By Cho Jin-young
  • July 11, 2018, 11:58
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SK Hynix System IC will establish a joint venture with the Wuxi Industrial Group to build a 200mm wafer analog semiconductor foundry plant in Wuxi, China.
SK Hynix System IC will build a 200mm wafer analog semiconductor foundry plant in Wuxi, China.

SK Hynix System IC, a subsidiary of SK Hynix, will construct a semiconductor foundry plant in Wuxi, Jiangsu Province of China. The plant will be built in the form of a joint venture with an investment company of the Wuxi government.

SK Hynix System IC announced on July 10 that the company would establish a joint venture with the Wuxi Industrial Group and build a 200mm wafer analog semiconductor foundry plant. Its total capital is 167.1 billion won and SK Hynix System IC owns a 50.1% stake of the plant. The joint venture will be headed by Kim Jun-ho, president of SK Hynix System IC.

The SK Hynix System IC will operate a joint venture by investing in-kind assets such as 200mm semiconductor manufacturing equipment. The Wuxi Industrial Group plans to provide infrastructure such as the factory building, facilities, water and electricity. The Wuxi Industrial Group will start the construction of the factory in the second half of this year and will complete it in the second half of 2019. "We plan to prepare to perfectly respond to customers by transferring 200mm foundry equipment from Cheongju M8 Factory in North Chungcheong Province in Korea to the new plant in China by 2021," an SK Hynix official said.

SK Hynix is geared toward pursuing the system semiconductor business centering on 300mm wafer CMOS image sensors. In addition, the company plans to continue high value-added and high technology oriented business in Korea by leaving an R&D function of the 200mm foundry project in Korea.

SK Hynix explains that the change is aimed at improving its system semiconductor business. M8 Factory has been producing analog semiconductors based on relatively old technology that produce system semiconductors of more than 110 nanometers with 200 mm wafers). Its system semiconductor business has limitations. Customers are only Koreans and its profitability is low. "We will to secure a diverse range of customers and raise profitability by moving our production facilities to China where demand for analog semiconductors is shooting up lately. Thus we will lay the foundation for creating a virtuous cycle for our system semiconductor business," an SK Hynix official said.

According to market researcher IHS Markit, the Chinese fabless market, which stood at US$ 25.5 billion in 2017, is expected to increase 2.7-fold to US$ 68.6 billion by 2021. This means that there will be better opportunities for foundry companies. SK Hynix has entered the 200mm CIS and foundry business in 2007 to improve its business structure, which lopsided toward memories. In July of last year, SK Hynix spun off System IC Division as SK Hynix System IC as its subsidiary.