S. Korea's SK Hynix to build foundry for chip production in China

SEOUL, NNA - South Korean chipmaker SK Hynix Inc. has gained approval from the Chinese government to build a foundry, aiming to capture growing demand for analog semiconductors in the world's second-largest economy.

SK Hynix System IC Inc., its wholly owned foundry business subsidiary, will form a joint venture with Wuxi Industrial Development Group Co., an industrial conglomerate backed by the municipal government in Wuxi, eastern China, to complete the factory in the second half of 2019, according to the South Korean company.

The subsidiary, which was spun off in July last year, plans to start factory construction within this year, spending $75.2 million, or 50.1 percent of the total investment. "We are likely to make an additional investment. But it depends on the market," a company spokesman told NNA in a phone interview.

The foundry will seek to meet rising chip demand for digital home appliances and automotive equipment, using 200-millimeter wafers for chip production. The market of outsourced semiconductor production is forecast to grow to $68.6 billion in 2021, up 2.7-fold from 2017, according to global research firm IHS Markit cited by SK Hynix.

China is a mega supplier of personal computers and smartphones, "but it will shift to a producer of automotive and other industrial products," Akira Minamikawa, principal analyst at IHS Markit, said in an email interview with NNA.

Automotive and other industrial producers require more analog chips than PC and smartphone makers as they need more analog chip-based sensors and power control features, he added.

SK Hynix System IC will relocate some of its foundry equipment from its plant in Cheongju, over 110 kilometers southeast of Seoul, to China through 2021, but retain research and development-related facilities there.

The South Korean group is stepping up efforts to curb dependence on such memory chips as NAND and DRAM as it faces a potential supply glut in the segment and catch-up by Chinese rivals. Sales from the foundry business make up only a fraction of the group's semiconductor business. (NNA/Kyodo)