SEOUL, Feb. 21 (Korea Bizwire) — SK hynix Inc., the world’s second-largest memory chip maker, said Thursday it has officially expressed interest in creating a semiconductor cluster in Yongin, Gyeonggi Province, about 50 kilometers south of Seoul.
A special purpose company has submitted a letter of investment intent, for investing in Yongin, to the city’s government, SK hynix said in a statement.
Yongin has been considered a potential site for the new project as it is close to SK hynix’s headquarters in Icheon, also in Gyeonggi Province. The memory fabrication plant of its bigger rival, Samsung Electronics Co., is in nearby Siheung.
“When the site is confirmed and ready, SK hynix plans to build four semiconductor fabrication plants in the cluster by investing 120 trillion (US$106.6 billion) after 2022,” the company said. “Over 50 equipment, parts and material makers will also move in to create a synergy effect.”
The site for the cluster is approximately 4.5 million square meters in area, which would make the world’s largest semiconductor cluster.
The cluster is part of the government’s broader plan to improve the semiconductor industry’s competitiveness amid the rapid rise of Chinese manufacturers backed by the Beijing government
Finance Minister Hong Nam-ki said last week that the government will confirm the project’s plan in the first quarter to speed up the process.
SK hynix said it picked Yongin for the cluster as most parts makers are located in Seoul metropolitan areas, which would create synergy between partners.
The company said it will invest 1.2 trillion won over the next decade for joint research and development and other support programs for its business partners.
The company said it will also pour 20 trillion in the next 10 years to expand capacities in its existing plants in Icheon and Cheongju.
When the project is completed, Yongin will serve as a base for DRAM and next-generation memory chips, while Icheon will serve as an R&D and DRAM hub and Cheongju will be NAND flash chip center, the company said.
With record-high profits over the last two years, the South Korean memory chip maker has jacked up investment in next-generation memory chips to embrace rising demand for autonomous driving, artificial intelligence and connected devices.
For 2018, SK hynix posted an all-time high net income of 15.5 trillion won on the back of strong global memory chip demand driven by data servers and high-end smartphones.
Its annual sales and operating profit reached 40.4 trillion won and 20.8 trillion won, respectively, breaking the previous record for the second consecutive year.
Following the stellar performance last year, SK hynix said it expects the memory chip market will slow down in 2019 due to weaker global demand and a drop in sales prices of DRAM and NAND products.