Planning to Invest 120 Trillion for 10 Years
SK Hynix has submitted a letter of intent to Yongin City, Gyeonggi Province, disclosing its intention to create a semiconductor cluster by investing 120 trillion won (US$106.5 billion).
The letter, which was sent to the city government on Feb. 21, demonstrated the company’s intention not be swayed by political power. Semiconductor industry experts say that SK Hynix wanted to put an end to intensifying competition among local governments to host the chipmaker’s semiconductor cluster. SK Hynix said it selected Yongin because it is easy to create a semiconductor ecosystem there and its researchers prefer a workplace close to the Seoul metropolitan area.
SK Hynix wants to build its semiconductor cluster on a site of about 4.48 million square meters in Yongin. The cluster will serve as a production base for DRAMs and next-generation memory products and a semiconductor win-win ecosystem base. SK Hynix is planning to build a triangle belt by linking the Yongin cluster with its headquarters in Icheon, which also has research and development (R&D) functions, a mother fab and a DRAM production base, and a NAND flash production base in Cheongju. By building the cluster, SK Hynix aims to generate synergies among the three sites.
Once the site selection is finalized, more than 50 domestic and foreign partners will set up their plants in the complex. Young is regarded as the best place to promote an ecosystem with suppliers of semiconductor equipment, materials and parts. About 85 percent of 244 members of the Korea Semiconductor Industry Association are located in Seoul and Gyeongg Province. Close cooperation between semiconductor manufacturers and their partners in R&D, performance analysis, equipment setup and maintenance holds the key to the success of the whole process of semiconductor technology development and production. Real-time cooperation between a semiconductor manufacturer and their partners is only possible in the Seoul metropolitan area. "Yongin has advantages in creating an ecosystem with partners as it is close to Samsung Electronics’ semiconductor factories in Giheung, Hwaseong, and Pyeongtaek," an industry official said.
Semiconductor experts say that it was inevitable for SK Hynix to pick Yongin as the location for the cluster to compete with Samsung Electronics in hiring talented researchers. As the new cluster will focus on developing next-generation memory semiconductors, its location should not be farther south than Yongin, given that researchers with doctorate and master’s degrees tend to avoid a workplace away from Seoul.
Once the Yongin cluster plan is finalized, competition between Samsung and Hynix will further intensify in order to bring in excellent human resources.
Samsung Electronics has enjoyed advantages in competition with SK Hynix as its chip factories in Giheung, Hwaseong and Pyeongtaek of Gyeonggi Province are closer to Seoul than those of SK Hynix in Icheon of Gyeonggi Province and Cheongju of North Chungcheong Province. In this context, Yongin can be an optimal location for SK Hynix’s cluster plan.
Hynix has also laid out plans for further investment to ease backlashes from local governments outside the Seoul metropolitan area, including Gumi in North Gyeongsang Province, Cheongju in North Chungcheong Province and Icheon in Gyeonggi Province. Not only their local residents but also their local political representatives tried to get attention from SK Hynix, hoping that the chipmaker would choose their areas as the location for the cluster.
First of all, SK Hynix announced a plan to invest in Icheon and Cheongju where SK Hynix business sites are already located. SK Hynix Icheon Plant has decided to invest 20 trillion won over about 10 years to build the M16 production line and an R&D building. The chipmaker’s Cheongju Plant will invest 35 trillion won for 10 years to expand the production capacity of the M15 line which has been running since last year. Hynix will also ink a contract with North Chungcheong Province and Chungju City to secure a site for its new plant in Cheongju.
Among local governments, Gumi campaigned the most actively with North Gyeongsang Province governor Lee Chul-woo taking the lead to attract the cluster. SK Group has come up with an investment plan for Gumi. It plans to invest about 900 billion won over the next two years in SK Siltron, a semiconductor wafer maker in Gumi.
In addition, "SK Group will invest 60 percent of its total investment over the next five years in areas which do not belong to the Seoul metropolitan area," SK Hynix said. SK Group would invest 22 trillion won in areas which do not belong to the Seoul metropolitan area in the fields of information communication technology (ICT), new energy industries, the material industry, health care and future mobility, the company added.