SK Hynix Weighs Memory Chip Joint Venture Plant in Japan

SK Hynix Inc. is considering building a joint memory chip production facility in Japan to meet rising demand fueled by the spread of artificial intelligence.

Bloomberg reported on August 31 that SK Group Chairman Chey Tae-won said at a Korea-Japan Chamber of Commerce meeting in Sendai that SK Hynix is reviewing the possibility of setting up a memory semiconductor joint venture plant in Japan. The company has not chosen a partner or a specific site.

Chey said SK Hynix is looking across Japan for possible locations. Any site would need ample power and water supplies. He did not name any potential joint venture partner.

SK Hynix is expanding production capacity in South Korea and overseas to keep pace with stronger memory demand tied to AI growth. In South Korea, it plans to expand chip production facilities with a 54 trillion won investment, equivalent to about $39 billion. In West Lafayette, Indiana, it is building an advanced memory packaging facility and held a groundbreaking ceremony for the plant last week.

The Japan review also fits with efforts to deepen cooperation with local customers and suppliers. SK Hynix indirectly owns a stake in Kioxia Holdings, the Japanese NAND flash maker. Chief Executive Officer Kwak Noh-jung recently said the company is closely examining ways to develop the NAND market together with customers and suppliers.

Rising investment in AI data centers is boosting demand not only for high-bandwidth memory, or HBM, but also for NAND flash. Big Tech companies including Meta Platforms Inc. and Amazon.com Inc. are expanding efforts to secure faster data storage devices than traditional hard disk drives as they build out large AI infrastructure.

Japan is home to many of SK Hynix's suppliers, including chip equipment maker Tokyo Electron Ltd., and also counts Sony Group Corp. and Nintendo Co. among major customers. Rival Micron Technology Inc. already operates a semiconductor plant in Hiroshima. The Japanese government has also provided large subsidies for local production investments by overseas chipmakers, including Taiwan Semiconductor Manufacturing Co.

Chey also stressed the need for closer economic cooperation between South Korea and Japan at the meeting. He, who also serves as chairman of the Korea Chamber of Commerce and Industry, cited shrinking labor forces in both countries and said now is the time for the two nations to form an economic bloc.