SK Hynix invests $39 billion to build fabs in South Korea

Last week SK Hynix revealed plans for a 46 trillion won (around US$39 billion) investment plan to increase production capacity in South Korea and enhance its competitiveness. World's second largest DRAM maker has earmarked 15 trillion won for its M14 DRAM fab in Icheon, a city southeast of Seoul. This will be world's largest DRAM production plant and it will start churning out chips during the current quarter.

The other 31 trillion won will be invested between now an 2024 for the building of two new chip factories: one in Icheon and another one in Cheongju City. It is unknown what these fabs would make or when they would begin production.

The expenditure is not expected to harm the business profitability and will fall within the bounds of what SK hynix would normally invest over such a period (from now until 2024). Investment in modern facilities is vital to compete against other memory industry players such as Samsung Electronics, Micron Technology and Toshiba.

SK Group Chairman Chey Tae-Won has just been released from prison. Chey was pardoned by the South Korean president after serving 31 months of a prison sentence. He was in prison due to being found guilty of embezzling 46.5 billion won from two SK Group affiliate companies. With Chey back at the head of the company and with this new investments plan SK hynix shares were up as much as 9.3 percent in early Tuesday trading, despite the Chinese influenced stock slump.