SK Hynix to increase spending on fab equipment in light of chip shortage

The South Korean memory maker will execute some of its spending plan earlier than scheduled to secure chip production equipment.

SK Hynix said on Wednesday that it will increase its spending on chip production equipment this year in light of the current global  chip shortage.

Spending in wafer fabrication equipment, or fab equipment, by semiconductor manufacturers are increasing due to the shortage, company CFO Kevin Noh said during SK Hynix's first quarter conference call .

In consideration of the increased lead time and setup period for the equipment, SK Hynix will execute some of its planned spending for 2022 earlier than scheduled to the second half of this year, the CFO said.

The subsequent increase in production capacity will take effect in 2022, Noh added.

Fab equipment makers Applied Materials and Lam Research have reported strong performances in their latest quarterly earnings from high demand for their equipment.

Earlier this month, the world's largest contract chip maker, Taiwan Semiconductor Manufacturing Company (TSMC) said it expects chip supply shortages to continue throughout 2022. AMD and Cisco are also expecting the shortage to continue throughout this year.

Last month, Samsung mobile boss DJ Koh said there was a serious imbalance in supply and demand of chips. However, Samsung's chip division and its boss Kim Ki-nam have so far not publicly commented on how the shortage is affecting its business. The South Korean tech giant recently saw its chip plant in Austin, Texas shutdown for a month from power outage due to winter storms.

Meanwhile, SK Hynix has reported sales of 8.49 trillion won and operating income of 1.32 trillion won in the first quarter. It is a rise of 18% and 65.5%, respectively, from the same time period in 2020.

The company said it saw high demand for its DRAM from mobile and PC sectors, despite the first quarter traditionally being the off-season. SK Hynix said it expects this high demand to continue.

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