Korea's SK hynix to go ahead with new U.S. chip factory

SEOUL, March 30 (UPI) -- The world's second-largest memory chip manufacturer, SK hynix, is forging ahead with plans to build a $15 billion semiconductor chip factory in the United States.

SK hynix Vice Chairman Park Jung-ho confirmed Wednesday at the firm's annual shareholder meeting that the review process for the construction was nearly complete.

In a video conference with U.S. President Joe Biden last July, SK Group Chairman Chey Tae-won promised to spend $15 billion to establish chip packaging plants in the United States.

It was thought that the U.S. CHIPS Act, aimed at attracting advanced chip manufacturing to the United States by offering $52.7 billion in federal incentives, had encouraged the investment decision.

However, manufacturers raised concerns after the Biden administration disclosed the act's detailed guidelines last month, which included a requirement for subsidy recipients to share excess profits, as well as revealing sensitive information.

"High, value-added packaging is indispensable to high-bandwidth memory chip production, which the U.S. customers demand. Thus, we have decided to commit to building the U.S. factories, as planned," Park said.

Asked whether SK hynix will apply for the CHIPS Act subsidies, Park said the firm had yet to decide.

The U.S. Commerce Department said it would protect confidential business information and that "upside sharing" would be determined on a case-by-case basis.

"The department expects that upside sharing will only be material in instances where the project significantly exceeds its projected cash flows or returns, and will not exceed 75% of the recipient's direct funding award," the department said in its Notice of Funding Opportunity for the CHIPS incentive program for facilities.

Park said the struggling global semiconductor market could turn around by the end of this year.

Due to the industry-wide slump, U.S. chipmaker Micron Technology, the world's third-largest, suffered a $2.3 billion loss during the December-February period with its sales halving to $3.69 billion.

SK hynix and business bellwether Samsung Electronics are also feared to have performed badly, to the tune of billions of dollars in losses, during the first quarter.

"But the excess supply of memory chips has been shrinking since last year. At the same time, it looks like the inventories held by the memory chip customers are also decreasing. So, things should improve later this year," he said.

The share price of SK hynix was down 1.7% Wednesday but rose 2.19% Thursday on the South Korean stock exchange.

This article has been updated to correct the title of SK hynix Vice Chairman Park Jung-ho.