SK Hynix Executives Inspect Gwangju Site for New Chip Fab After Record $43.8 Billion Quarter

SK Hynix Executives Visit Gwangju Military Airport Site

Follow-Up to Staff Inspection Focuses on Potential New Fab Location

SK Hynix executives visited the Gwangju military airport site after the chipmaker posted its strongest quarterly results on record. The trip was aimed at reviewing a location where the government has said Samsung Electronics and SK Hynix could build four advanced semiconductor fabs.

The executive visit followed a preliminary inspection by company staff. It adds momentum to talks on carrying out a semiconductor megaproject in South Korea's southwest.

According to industry officials on July 29, about 15 SK officials, including Yeom Seong-jin, president and head of communications at SK Hynix, toured the Gwangju military airport and nearby areas from 12:50 p.m. to 1:40 p.m.

The group checked the size of the site and areas that could accommodate semiconductor production facilities. They also reviewed transport links including roads and railways, as well as power and water supply conditions. After the field visit, they met from 2 p.m. at the Gwangju government complex with Min Hyeong-bae, special mayor for the integrated Gwangju-Jeonnam city initiative, to discuss fab construction plans.

The agenda included relocation of the military airport, the timetable for creating an industrial complex and ways to secure key infrastructure such as electricity and water, according to industry officials. Fast-track permits, corporate support systems and phased investment schedules were also discussed.

The visit followed a preliminary inspection of the military airport site by SK Hynix staff on July 23. The review has now moved from a working-level assessment to executive-level talks. Samsung Electronics staff also visited the same site on July 25, industry officials said.

The government said on June 29 that Samsung Electronics and SK Hynix would invest a combined 800 trillion won ($578.7 billion) in the Gwangju military airport site to build four advanced semiconductor fabs as part of a southwest semiconductor megaproject. The government and the special city plan to pursue the airport relocation, industrial complex development, power and water supply networks and permitting procedures in parallel, with a target of starting first mass production in 2030. Each company's investment size, groundbreaking schedule and fab allocation will be decided in further talks.

SK Hynix said on July 29 that second-quarter operating profit on a consolidated basis reached 60.5426 trillion won ($43.8 billion), the highest quarterly figure in its history. That was up 557.2% from a year earlier. Revenue rose 256.8% to 79.3187 trillion won ($57.4 billion). Operating margin topped 76%.

First-half revenue totaled 131.895 trillion won ($95.4 billion), the first time the company has exceeded 100 trillion won for a six-month period. First-half operating profit was 98.1529 trillion won ($71.0 billion). The gains were driven by stronger sales of high-value products such as high-bandwidth memory, AI server DRAM and enterprise solid-state drives, helped by rising investment in AI infrastructure. Cash and cash equivalents stood at 88 trillion won ($63.7 billion) at the end of the second quarter, while borrowings were 18.6 trillion won ($13.5 billion). Net cash expanded to 69.4 trillion won ($50.2 billion).

On its earnings conference call, the company said investment in AI infrastructure by major cloud service providers would likely remain solid next year and beyond. Memory demand under discussion with customers reflects the same trend. The company also said it had completed negotiations on long-term supply contracts with more than 10 customers.

SK Hynix expects this year's capital spending to be in the upper-40 trillion won range, more than 10 trillion won above last year's level. It said production capacity would be expanded flexibly based on confirmed demand, limiting the risk that its medium- to long-term investment plan would immediately lead to oversupply. The company added that no specific decision has been made on additional new production infrastructure investment beyond plans already announced.

To improve timely supply capacity, SK Hynix will move up mass production at its Cheongju M15X plant and open the clean room for the first fab in Yongin early next year, allowing it to ramp up output quickly through investment. Medium- to long-term projects, including the advanced packaging plant P&T7 and the NAND production base M17, will also be carried out in phases based on customer demand and investment efficiency.

In the second half, the company plans to expand supply of HBM4, its sixth-generation HBM product. SK Hynix said it began mass-production shipments of HBM4 to major customers in the second quarter and that yields and quality are close to those of the previous-generation HBM3E. It has completed sample shipments of HBM4E to customers and is targeting mass production next year.

The company said a larger share of HBM4 shipments, increased shipments of conventional DRAM made with its 10-nanometer-class sixth-generation process and an improved product mix would lift average selling prices and support second-half earnings. It forecasts third-quarter shipments will rise about 10% from the previous quarter for DRAM and by the low-single-digit percentage range for NAND.

Kim Dae-young, Hankyung.com reporter kdy@hankyung.com