SK Hynix mulling making chips in US

APPEAL: Any agreement to produce advanced memory such as HBM or DRAM could run into opposition from Seoul as those technologies are sensitive, sources said

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South Korea’s SK Hynix Inc is in talks with Intel Corp about a deal that would see it manufacture memory chips on US soil for the first time, three people familiar with the discussions said.

Under one potential scenario, SK Hynix would lease part of Intel’s long-planned chipmaking facility in Ohio, they said. Under another scenario, it could form a venture with Intel and major cloud firms that are keen to lock in memory supplies, two of the people said.

A deal would relieve pressure on Intel, which has been struggling, and mark a big win for US President Donald Trump’s administration, which has been ramping up pressure on chipmakers to build in the US as relentless investment in artificial intelligence (AI) and data centers fuels an acute shortage of memory chips.

The SK Hynix logo is pictured at the company’s headquarters in Incheon, South Korea, on July 29.

Photo: AFP

However, potential opposition from Seoul could be a major hurdle, the sources said.

One of the sources described the talks as exploratory and stressed that no decisions have been made, adding that SK Hynix might consider other ways to structure the deal.

SK Hynix’s product lineup includes DRAM chips used in servers, PCs and smartphones and NAND flash memory chips that provide long-term storage memory. It is also the leading supplier of high-bandwidth memory (HBM) used in AI processing units.

Any agreement to produce advanced memory such as HBM or even DRAM could run into opposition from the South Korean government as those technologies are considered sensitive, said the three sources who declined to be identified as the information is not public.

SK Hynix said in a statement that it is “reviewing various measures, including establishing additional production bases, to strengthen the competitiveness of its memory business,” but “no matters have been determined at this stage.”

Intel declined to comment on what it called speculation, but added that it was continuing with investments in Ohio to ready the site.

Asked about a potential SK Hynix plan to produce chips in the US, South Korean Ministry of Trade, Industry and Resources said any decision would be at the company’s discretion, but if it involved a “national core technology,” it would be subject to a review under the Industrial Technology Protection Act.

The US Department of Commerce did not respond to a request for comment.

Manufacturing semiconductors in the US costs much more than in South Korea, the sources said.

Building in the US entails significantly higher labor and construction costs, and much of the semiconductor industry’s supply chain is located within Asia, which also increases US costs, one of them said.

Even so, SK Group chairman Chey Tae-won said in July that the company faces enormous pressure and lobbying from customers and countries to supply more chips.

“I think we need to build a factory in the United States. If possible, I believe we should build it,” he told reporters.