In a move to bolster its semiconductor production, memory chip manufacturer, SK Hynix, has announced plans to invest $6.8 billion in a new production facility in South Korea.
What Happened: A key Nvidia Corp. NVDA supplier is set to invest 9.4 trillion Korean won ($6.8 billion) in the construction of a new semiconductor manufacturing plant in South Korea’s emerging chip hub, Yongin Semiconductor Cluster, CNBC reported on Friday. The construction of this new facility, which will be the company’s first in the cluster, is slated to begin in March next year, with completion expected by May 2027.
This new plant is part of SK Hynix’s larger commitment to invest 120 trillion won in the construction of four fabs in the Yongin cluster. The remaining three fabs are expected to be established at a later date.
SK Hynix, a leading memory chip maker and supplier to Nvidia, has recently reported its highest second-quarter profit in six years, driven by the AI wave and its partnership with Nvidia.
SK Hynix’s aggressive investment strategy is a reflection of its and the South Korean government’s efforts to maintain the country’s lead in memory, which is crucial for artificial intelligence applications. Seoul has committed billions of dollars in support of its semiconductor ventures.
Why It Matters: Earlier this year, SK Hynix reported its highest quarterly profit since 2018, attributing the surge to the increasing demand for artificial intelligence chips. The company’s revenue also soared by 125% year-over-year to a record quarterly high, driven by the surging demand for high-end DRAM chips, including High Bandwidth Memory chips used in data center servers and on-device AI services.
Furthermore, Wall Street analysts predict further growth for SK Hynix, a major supplier of high-bandwidth memory chips to Nvidia Corp. NVDA. The revisions are driven by the high potential for AI and the anticipation of a positive surprise in this month's earnings.
The announcement also comes after South Korea’s $19 billion support package for its semiconductor sector, was revealed in May 202. The package includes a $12 billion financial support program to encourage large-scale investments by semiconductor firms.
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Image via SK Hynix
This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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