South Korean chip maker SK Hynix denies reports it is selling firm’s Dalian flash memory fab, assuring construction to be completed

South Korean memory chip maker SK Hynix has denied reports that it plans to dispose of its new semiconductor fabrication plant in Dalian, a port city in northeast Liaoning province, amid US-led restrictions on exports of hi-tech manufacturing equipment to China.

“The rumoured sale of the facility is unsubstantiated,” SK Hynix said in response to a South China Morning Post inquiry on Thursday. The world’s second-largest memory chip maker asserted that “the construction of SK Hynix Dalian facility will be completed as planned”.

Earlier this month, SK Hynix was reported by South Korean media outlet The Elec to be delaying construction and considering the sale of its Dalian 3D NAND flash memory factory, which the Seoul-based company acquired for US$9 billion from Intel Corp in December 2021, in light of trade restrictions and slumping demand in the global memory chip market.

The speculation reflects lingering uncertainty over the future of South Korean chip makers Samsung Electronics and SK Hynix’s investments on the mainland, as Washington exerts pressure on Seoul and other economic allies to isolate China from global tech supply chains.

The US has asked South Korea to press its chip makers not to fill any market gap in China if Beijing bans American semiconductor firm Micron Technology from selling its products on the mainland, according to a report on Sunday by the Financial Times, which cited people familiar with the talks. Chinese regulators launched a cybersecurity review into Micron in March.

US President Joe Biden’s administration had earlier secured in January an agreement with the Netherlands and Japan to restrict exports of some advanced chip-making machinery to China.

That followed the US Commerce Department’s initiative in October last year, when it released updated policies intended to halt shipments of advanced chips and semiconductor-manufacturing technology of potential use to China’s military build-up and bid to dominate key industries.

Foreign-owned chip foundries in China – including SK Hynix’s 300-millimetre DRAM wafer fab in Wuxi, a city in eastern Jiangsu province – have been granted a one-year grace period during which they can continue to import equipment from the US. Samsung and Taiwan Semiconductor Manufacturing Co received exemptions last year.

US urges South Korea not to fill China shortfalls if Beijing bans Micron chips

Intel, which manufactured NAND wafers at the Dalian memory facility until its transaction with SK Hynix closed, said last October it was granted a one-year authorisation by the US government to continue memory chip operations at that plant.

The stakes are high for SK Hynix to continue its manufacturing operations on the mainland.

The firm’s Wuxi factory, for example, is currently the largest foreign investment project in Jiangsu. This facility is also critical to the global electronics industry because it is responsible for about half of SK Hynix’s DRAM chip output and roughly 15 per cent of the world’s production.

SK Hynix on Wednesday reported first-quarter revenue of 5.088 trillion won (US$3.798 billion), a 58 per cent decline from a year earlier, amid the downturn in the global memory chip market. It slipped to a 2.586 trillion won net loss, from a 1.987 billion won profit in the same period in 2022.

Samsung Electronics posts record chip losses as memory slump nears nadir

Samsung, the world’s largest memory chip maker, on Thursday posted record quarterly losses in its semiconductor division, as prices in the US$160 billion global memory industry continued to slide in the first quarter.

The global memory market stumbled on weaker demand in the first quarter, according to electronics research firm TrendForce. It said the average selling prices of DRAM and NAND products fell by as much as 15 per cent during the first quarter.