SK Hynix is reducing its CIS and wafer foundry operations to prioritize high-margin HBM and AI memory products. It is also expanding into emerging technologies, including Compute Express Link (CXL), Processing-in-Memory (PIM), and AI SSDs, to align with the growing demand for next-generation memory solutions.
SK Hynix is scaling down CIS development, cutting production capacity to less than half of 2023 levels, with 12-inch wafer output projected to fall below 7,000 units monthly. Staff from the system-on-chip (SoC) design division are being reassigned to HBM operations to strengthen the company's focus on high-performance memory, according to ZDNet Korea and Tencent News.
Analysts see SK Hynix's pivot as a shift from non-core operations to high-margin HBM products. The company is also channeling efforts into high-growth sectors like CXL, PIM, and AI SSDs, reflecting its commitment to next-generation memory solutions for AI and data-intensive workloads.
Industry insiders note that SK Hynix's recent shift reflects a move away from CIS investments toward HBM and AI storage, reallocating resources to focus on high-demand, high-margin memory solutions.
While DRAM and NAND flash prices are expected to decline in the fourth quarter of 2024, HBM prices are forecast to rise by 8–13%, according to TrendForce and Korea JoongAng Daily. Insiders note that HBM production lines can recoup investments within three months, underscoring the strategic importance of this high-margin memory for companies.
CIS has never been a core business for SK Hynix. In 2023, Sony led the global CIS market with a 42–45% share, followed by Samsung Electronics at 19% and OmniVision at 11%, according to Yole Développement. SK Hynix ranked sixth, with only 4%, reflecting its limited presence in this competitive market.
In 2016, SK Hynix entered the CIS market by acquiring Silicon File's CIS division for KRW4.5 billion (approximately US$3.83 million). To strengthen its position, it launched the Black Pearl lineup and established a CIS R&D center in Japan in 2019, highlighting its commitment to competing in the imaging sector, according to Market Screener and TechPlus by Mynavi.
Although SK Hynix supplied CIS products for mid- to low-end smartphones in China and Samsung's Galaxy Z3 and Galaxy A series, it has struggled to compete with the CIS market leaders like Sony and Samsung.
While this pivot into CIS aligns with the company's broader diversification strategy, declining smartphone demand and intensified competition have eroded its edges. As a result, SK Hynix continues to focus on higher-margin products, such as HBM and AI memory, to meet evolving market demands and sustain profitability.
Amid declining demand for Display Driver ICs (DDI) and CIS, SK Hynix System IC's utilization dropped below 50% during the 2023 semiconductor downturn. To adapt, SK Hynix sold a 49.9% stake in SK Hynix System IC, its 8-inch wafer subsidiary, to Wuxi Industrial Development Group (WIDG) in May 2024, retaining a 50.1% stake while leveraging WIDG's regional influence to enhance its foundry operations in China.
SK Hynix is shifting toward high-margin products through SK Hynix System IC, with plans to begin GaN semiconductor production in late 2025. It is also developing SiC semiconductors in collaboration with wafer manufacturers, targeting mass production on 8-inch wafers to strengthen its foothold in the power semiconductor market.
