SK Hynix has announced board approval for a KRW9.4 trillion (approximately US$6.77 billion) investment to construct its first plant and related operational facilities at the Yongin Semiconductor Cluster in South Korea. Construction is set to begin in March 2025, with completion targeted for May 2027. The project aims to meet the growing demand for AI-related memory.
Expanding production capacity for next-gen DRAM
The Yongin Semiconductor Cluster, located in Wonsam-myeon, covers an area of 4.15 million square meters. SK Hynix plans to primarily produce next-generation DRAM products, including high-bandwidth memory (HBM), at the first plant. Three additional plants will be constructed subsequently, forming a semiconductor cooperation park with over 50 global materials, components, and equipment companies.
In the second quarter of 2024, SK Hynix's revenue from HBM surged over 80% quarter-on-quarter and more than 250% year-on-year, significantly boosting the company's performance. SK Hynix expects HBM revenue to grow by 300% year-on-year in 2024, with shipment volumes in 2025 projected to double those of 2024. The company is optimistic about the trend of shorter product cycles among GPU customers, necessitating an urgent expansion of production capacity.
SK Hynix plans to establish a mini factory within the first plant to provide an environment similar to actual production sites. This facility will serve as a space for South Korean materials, components, and equipment companies to research, develop, verify, and evaluate new technologies, supporting partners in improving their technology's completeness.
However, the industry has highlighted that stable power supply remains the biggest challenge for the Yongin Semiconductor Cluster. With Samsung Electronics also making large-scale investments in Yongin, it is estimated that Samsung will require about 10GW of power, and SK Hynix about 6GW, accounting for 40% of the total power demand (40GW) in the Seoul Metropolitan Area.
The Yongin Semiconductor Park project, initially announced in 2019 with an original completion date set for 2026, faced delays due to land acquisition and compensation processes, as well as conflicts over water resources with Yeoju City. Whether SK Hynix can fully resolve resource issues like water and electricity and complete the project by 2027 as scheduled remains to be seen.
Kim Young-sik, head of manufacturing technology at SK Hynix, stated that the Yongin Cluster will be the foundation for SK Hynix's mid-to-long-term development and a collaborative innovation space with partners. The company aims to enhance the competitiveness of South Korea's semiconductor technology and ecosystem through the construction of this large-scale industrial park.
