SK Hynix plans new semiconductor facility despite oversupply of DRAM

Greg S

TS Evangelist

As the second largest manufacturer of DRAM, SK Hynix has shared plans for a $3.1 billion investment into a new manufacturing facility in South Korea. Following a $1.6 billion share buyback program, SK Hynix will be building out its capabilities even though there is currently an inflated supply of DRAM that is causing prices to drop.

Due to how quickly memory technologies are advancing, SK Hynix has not yet decided what type of memory will actually be produced at the new plant. Both DRAM and NAND memory are likely choices, but more specifically within those two classes are dozens of types of memory. With a scheduled ribbon cutting in October 2020, memory markets could change a great deal by then.

One of the reasons cited for building a new plant includes the need for more clean room space. The tooling and machinery required to produce smaller scale components is ironically getting larger, so that extremely fine precision is possible.

SK Hynix opened a new fabrication center in 2015 known as M14. A second facility is currently in the midst of construction in Cheongju, South Korea. The current plans for its third new facility dictate that the fabrication house will be built alongside SK Hynix's headquarters in the city of Icheon in the Gyeonggi province.

For end users, an overabundance of memory chips is a good sign. Declining prices should continue as competition will need to lower prices in order to make volume sales. As memory requirements are creeping upwards along with processor core counts, it is about time for pricing to drop.

Permalink to story.

 

Greg S

TS Evangelist
Why are authors allowed to spread false information? Shouldn’t this be verified? There is no oversupply, that is the reason of the new fab. Ugh
I have no problem with criticism, but I stand behind what is written here. The information has been verified by others as well. Reuters staff members also agree with me that there is indeed an abundance causing prices to drop. Respectfully, I believe your comment to be completely inaccurate.
 

HardReset

TS Guru
I have no problem with criticism, but I stand behind what is written here. The information has been verified by others as well. Reuters staff members also agree with me that there is indeed an abundance causing prices to drop. Respectfully, I believe your comment to be completely inaccurate.
Talking about computer hardware and using Reuters as a source :D

There is currently no oversupply for DRAM. There is less-than-before undersupply that causes prices to drop. Completely different thing than oversupply.

This quote tells that Reuters have no clue what they are writing about:

It is essential to make additional investments in order to meet growing memory chip demand,” the company said in a statement.
Why they need to make new investments to meet growing demand if there is already oversupply? That doesn't make any sense. Because if there is oversupply, there is no need to make any new investments to meed demand ;)
 
  • Like
Reactions: ShObiT

ShObiT

TS Maniac
Talking about computer hardware and using Reuters as a source :D

There is currently no oversupply for DRAM. There is less-than-before undersupply that causes prices to drop. Completely different thing than oversupply.

This quote tells that Reuters have no clue what they are writing about:



Why they need to make new investments to meet growing demand if there is already oversupply? That doesn't make any sense. Because if there is oversupply, there is no need to make any new investments to meed demand ;)
Well Said!
 

PcePce

TS Enthusiast
Why they need to make new investments to meet growing demand if there is already oversupply? That doesn't make any sense. Because if there is oversupply, there is no need to make any new investments to meed demand ;)
Not quite. The quote implies that their investment is intended to satisfy projected demand, as most investments of this nature are. Even if an oversupply exists, they would still have reason to expand based upon their projections for future demand. A company can't just look at insufficient production and say "Whelp, we'll just pick up the slack with all this overstock." They would need to preempt a potential shortage by increasing their supply ahead of time, such as by creating a new facility.
 
  • Like
Reactions: sukhwant singh

HardReset

TS Guru
Not quite. The quote implies that their investment is intended to satisfy projected demand, as most investments of this nature are. Even if an oversupply exists, they would still have reason to expand based upon their projections for future demand. A company can't just look at insufficient production and say "Whelp, we'll just pick up the slack with all this overstock." They would need to preempt a potential shortage by increasing their supply ahead of time, such as by creating a new facility.
Not quite. Current situation exists because manufacturers didn't make new facilities few years ago even they knew there will be shortage now. Why? Because few years ago oversupply existed. When there is oversupply, manufacturers don't make new capacity, but rather reduce it. It causes shortage and prices go up. When there is shortage and prices are high, manufacturers again have money to make investments to keep market share high. That's how it goes over and over again on memory market. DDR5 also causes some need for investment.

This news item still needs fix. There is not even single evidence about DRAM oversupply right now.
 

Littleczr

TS Guru
Judging from GOOG, AMZN and AMD quarterly earnings there is still demand for memory. We will find out about mobile demand next week when AAPL reports earnings.