SK Hynix announced once again that it is urgent to expand the foundry business and expand the production of Wuxi Plant.

The demand for chip contract manufacturing remains high, and manufacturers in the industry have increased their size and expanded production one after another. Recently, South Korea's SK Hynix announced that it will make full use of the old semiconductor memory manufacturing equipment to develop semiconductor contract manufacturing business, and seize the needs of display-driven semiconductors, power management semiconductors and other subdivided areas.

Park Zhenghao, vice president of SK Hynix, recently said publicly that he would expand the OEM production capacity to twice the current production capacity. According to the reporter's understanding, the company is currently considering the full acquisition of 8-inch wafer foundry Key Foundry. According to SK Hynix insiders told Science and Technology Innovation Board Daily, the company is indeed considering various options to expand its contract manufacturing business, but it has not yet been determined.

Not only SK Hynix, but since the fourth quarter of last year, large chip manufacturers such as TSMC, Samsung, Grid Core and Intel have launched plans to expand production. Behind this, under the tide of shortage of semiconductors, MOSFET, driver IC, power management IC, MCU, CIS, flash chips are out of stock one after another, driving the high demand of the global wafer foundry market.

According to the forecast of Trendforce, under the background of the business cycle of the chip market, the market size of the global chip contract manufacturing industry in 2021 is expected to reach 94.5 billion US dollars, an increase of 11% compared with the same period last year. According to the analysis of the research report of Ping an Securities at the end of May, in the short term, under the demand of PMIC, driven IC, etc., the production capacity of round foundry is in short supply, and the utilization rate of main wafer foundry capacity is more than 95%, maintaining a high position.

Focus on SK Hynix, the company's subsidiary SystemIC is currently engaged in wafer foundry business, according to industry insiders told Science and Technology Innovation Board Daily: "SystemIC wafer foundry business was originally in South Korea, and now the equipment is moving to Wuxi."

According to market news, SystemIC is mainly responsible for 8-inch wafer foundry business. As for the wafer foundry production capacity and process of the subsidiary, and whether the materials of local suppliers in China will be considered after the relocation to Wuxi, the above-mentioned people said that the production capacity is not disclosed to the public, and the material suppliers and the process are not clear.

An analyst who has been watching semiconductors for a long time said that SystemIC is likely to use 40nm and previous mature processes, and if SystemIC Wuxi wafer foundry can be applied to Chinese manufacturers' equipment, it will be better than the performance of the corresponding companies. According to people familiar with the matter to reporters, the current SK Hynix OEM business 8-inch equipment and 12-inch equipment new and old equipment.

Public data show that at present, the scale of SK Hynix wafer foundry business is relatively small. SK Hynix accounted for only about 2% of SK Hynix's operating income of 32 trillion won in 2020. From an industry point of view, wafer foundry head manufacturers TSMC, SMIC, Liandian, Huahong and other performance growth are good.

According to the quarterly data disclosed by SK Hynix in April, the company combined revenue of 8.494 trillion won in the first quarter of fiscal 2021, with an operating profit of 1.324 trillion won and a net profit of 9926 trillion won. In the first quarter of fiscal 2021, the operating profit margin was 16%, and the net profit margin was 12%. The company's revenue and operating profit increased by 7% and 37% respectively compared with the previous month.