SK hynix, the world’s second-largest memory chip maker, said Thursday it has begun mass production of its 238-layer 4D NAND Flash memory, boasting the industry's highest layer count and widening the technological gap with its rivals.

The chipmaker said it has also begun product compatibility tests with a global smartphone manufacturer. When completed, it will begin supplying the 238-layer NAND product for smartphones, and expand usage across its product portfolio, such as Peripheral Component Interconnect Express 5.0 solid-state drives and high-capacity server SSDs.

“SK hynix has developed solution products for smartphones and client SSDs which are used as PC storage devices, adopting the 238-layer NAND technology, and moved into mass production in May,” the company said.

“Given that the company secured world-class competitiveness in price, performance and quality for both 238-layer NAND and the previous generation 176-layer NAND, we expect these products to drive an earnings improvement in the second half of the year.”

With the latest development, SK hynix is widening the gap in its competition with rival NAND Flash suppliers such as US-based Micron Technology and China's Yangtze Memory Technologies Corp.

Micron was the first chip manufacturer to mass-produce 176-layer NAND in 2021, and was also the first to mass-produce 232-layer NAND Flash in 2022. YMTC also came level with the ability to mass-produce 232-layer NAND.

SK hynix announced the development of the industry's best 238-layer NAND Flash in August 2022.

SK's latest product is the smallest NAND in size, and has a 34 percent higher manufacturing efficiency compared to the previous generation of 176-layer, resulting in a significant improvement in cost competitiveness, SK hynix explained.

The chipmaker added that the 238-layer NAND will deliver improved performance for smartphones and PCs, as it has raised the data-transfer speed by 50 percent to 2.4 Gigabits per second from the previous generation, and enhanced the read and write speed by 20 percent.

“We will continue to overcome NAND technology limitations and increase our competitiveness so that we can achieve a bigger turnaround than anyone during the upcoming market rebound,” said Kim Jum-soo, who heads S238 NAND at SK hynix.

The tech giant logged its worst operating loss of 3.4 trillion won ($2.6 billion) in the first three months of this year, falling into the red for a second consecutive quarter amid slumping demand and falling prices.

The company's sales posted 5.09 trillion won during the period, down by 34 percent from the previous quarter. The operating margin plunged by 79 percent and its net losses came to 2.58 trillion won during the three-month period.

In the earnings call for the first quarter, the chipmaker said it will focus on sales of advanced chips, DDR5, High Bandwidth Memory and 176-layer NAND flash. The latest 238-layer NAND is expected to support the company's earnings recovery.

World Semiconductor Trade Statistics has forecast the global chip market will continue to experience a downturn, decreasing 10.3 percent in 2023 to log annual sales of $515.1 billion, but the figure will recover in the coming year to reach $576 billion, showing an estimated growth of 11.8 percent.

The US-based Semiconductor Industry Association also said the market will gradually recover, as global chip sales increased on-month by 0.3 percent to $40 billion in April.