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SK Hynix $107 billion chip factory proposed

Feb 22,2019
SK Hynix said Thursday it will invest 120 trillion won ($106.6 billion) to build four semiconductor factories 40 kilometers (24.8 miles) south of Seoul as the company looks to maintain its position in the highly competitive and increasingly challenging business.

A special company established for the project submitted a letter of investment intent to the Yongin city government in Gyeonggi Wednesday. The chipmaker will build the facilities after 2022 once the local government agrees to the proposal.

If approved and completed, the complex will be 4.48 million square meters (1,107 acres) in size. It will house the new SK Hynix production plants as well as over 50 domestic and overseas parts suppliers.

The central government announced plans to work with the industry to build a state-of-the-art semiconductor facility late last year in an attempt to strengthen the country’s competitiveness, maintain its dominance in the semiconductor market and maintain production of the chips.

Semiconductors account for 16 percent of the country’s total exports, the largest export category, but the business is being challenged by companies overseas, especially competitors from China.

The government’s focus on developing regional economies has complicated selection and slowed the decision-making process. Local governments outside the capital region have engaged in a fierce competition to host the project. Numerous candidates, such as Gumi in North Gyeongsang and Cheonan in South Chungcheong, have expressed their interest.

SK Hynix, the world’s No. 2 chipmaker, explained in a statement that building the complex in Yongin has advantages over other locations. It would be attractive to both local and international talent as it is close to Seoul, is near other locations with existing semiconductor facilities and has established infrastructure.

As part of the deal, SK Hynix will invest 1.22 trillion won to further strengthen cooperation with other companies in the proposed complex, creating a cooperative fund with 300 billion won and spending 280 billion won on joint research and development. The chipmaker said it will continue investment in its existing semiconductor facilities, committing 20 trillion won to its factory in Icheon, Gyeonggi, and 35 trillion to its facility in Cheongju, North Chungcheong, over 10 years.

Responding to the SK Hynix proposal, the Cheonan City Council said that the plan would impede the country’s development.


BY CHAE YUN-HWAN [chae.yunhwan@joongang.co.kr]