SK hynix promises no production cuts amid sluggish demand

SK hynix vowed that there will be no additional production cut in its memory chip business as the sluggish semiconductor market is showing signs of improvement from the second half of this year, its vice chairman said Wednesday.

At the shareholders’ meeting held at the company’s headquarters in Icheon, Gyeonggi Province, Vice Chairman Park Jung-ho added that the company will establish a chip packaging plant in the United States, as it previously announced, as there is a growing demand for an advance chip packaging business there.

Last year, due to decreased demand for memory chips, SK hynix said that it would reduce its investment by 50 percent in 2023 compared to 2022 and reduce the production of less profitable products. However, when asked about implementing an additional production cut, Park dismissed it saying “we won’t.”

Park hinted at the possibility that the global chip market will improve in the second half of 2023 during the shareholders’ meeting.

“We have decreased investment and production volume in memory chips since last year and we expect the effect of reducing supply to be visible. The inventory level of our customers is also gradually running out, so we expect the market situation to normalize,” Park said.

However, he added that the recent collapses of banks “certainly shows the possibility that the macro-economy will delay the overall recovery due to these kinds of unexpected events.”

“We are trying to respond flexibly to this uncertain business environment. The management believes that it is necessary to flexibly adjust the speed of our mass production according to market conditions,” the vice chairman added.

Regarding any impact on the operation of its factories in China after the U.S. began strengthening its restrictions against it, Park said, “We will change our management plans following the U.S.-China conflict while buying as much time as possible.”

In October 2022, SK hynix and other chip-making companies earned one-year waivers from the U.S. for their chip-making factories in China so as to import chip equipment without applying for permission from Washington.