Seeking to Penetrate Chinese Market
SK Hynix System IC's foundry in Wuxi, China has begun volume production. The company, which is SK Hynix’s wholly owned foundry subsidiary in China, held a ceremony on Dec. 12 to celebrate the start of volume production.
The foundry is a joint venture with Wuxi City established in July 2018. SK Hynix System IC has a 50.1 percent stake in the plant with Wuxi Industrial Group holding the remaining 49.9 percent stake.
The Wuxi foundry plant produces semiconductors for home appliances such as CMOS image sensors and display driver ICs (DDIs) with 8-inch wafers. SK Hynix System IC completed a clean room at its Wuxi plant in the first half of 2020 and is moving equipment from its plant in Cheongju, Korea to the Wuxi plant. On Nov. 5, 1,206 pieces of semiconductor equipment worth 194.2 billion won were handed over to the joint venture. It is planning to actively penetrate the Chinese foundry market.
SK Hynix System IC’s earnings are on the uptick. Its cumulative net profit in the first three quarters of 2020 amounted to 79.1 billion won, surpassing its annual net profit in 2018 (60.6 billion won) and 2019 (76.6 billion won). The company has been enjoying a boom in demand for its flagship 8-inch products.
In fact, 8-inch foundry products prevailed from the 2000s to the early 2010s. As they are smaller than 12-inch wafers, their production cost is lower. However, the situation was reversed with the emergence of micro-fabrication technology. Producing more semiconductors from 12-inch wafers became much more advantageous in terms of cost. Top foundry companies such as Taiwan's TSMC and Samsung Electronics are focusing on 12-inch wafers rather than 8-inch ones. They mass-produce application processors (APs) and others for fabless companies such as Qualcomm in the United States.
Recently, 8-inch foundry companies such as SK Hynix System IC and DB HiTek have been making a foray into niche markets. They target small and medium fabless companies that design low-pixel image sensors, power management ICs (PMICs), and DDIs that do not require micro fabrication technology. They can produce foundry products in small quantities and offer customized services to their clients, unlike the 12-inch foundry companies that use more expensive wafers and can only handle large-quantity orders.