SK Hynix calls CHIPS Act 'too demanding,' with decision 'still under consideration'

Jingyue Hsiao, DIGITIMES Asia, Taipei 0

Credit: AFP

SK Hynix, the second-largest DRAM producer and one of the major NAND manufacturers, is evaluating the incentives extended by the US federal government and is looking to buy more time to adjust its global production capacity. Regarding the matter, a SK Hynix representative told DIGITIMES that the company is still "under serious consideration"

According to Yonhap News, Korea Times, and Reuters, Park Jung-ho, co-CEO of SK Hynix, said on March 29 at the annual general meeting of shareholders that the company found the application process for CHIPS Act too demanding and is still determining whether to apply.

On March 27, the National Institute of Standards and Technology under the US Department of Commerce released a notice which requires companies interested in the incentives to disclose detailed financial projection information like expected utilization, wafers produced, wafer yield, and wafer sale prices.

Besides, Park said that the company would seek the exemption of curbs after the current grace period ends in October 2023. In October 2022, the Bureau of Industry and Security under the US Commerce Department imposed export controls on China, restricting shipping chip-making equipment to China by requiring prior approval.

The ban forced SK Hynix to reconsider its operations in China, especially when the company had completed an acquisition of a NAND Flash and SSD manufacturing facility in Dalian from Intel after approval from the Chinese government in 2021. According to SK Hynix's website, besides Dalian, the company has production bases in Wuxi and Chongqing, all located in China.

In order to diversify from heavy reliance on China amid the US's intention to slow China's semiconductor ambition, SK Hynix announced an investment of KRW15 trillion (US$11.49 billion) to build a memory manufacturing plant in Cheongju, South Korea, with construction expected to be completed in 2025.

Meanwhile, according to the reports, Park also promised that there would be no additional production cut in the memory business as the company expects the demand to improve from the second half of 2023. The memory maker decided to reduce capital expenditure by 50% for 2023 compared with a year earlier when disclosing its financial results for the third quarter of 2022.