The Korea Herald

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SK Hynix to produce controller chip for NAND Flash by 2014

By Korea Herald

Published : April 26, 2012 - 18:53

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World’s No.2 DRAM chipmaker takes cautious stance on acquisition of Elpida


SK Hynix said Thursday that it is currently developing its own controller chip for NAND Flash memory, widely used in smartphones and tablet PCs, and plans to have it ready for production by 2014.

Park Sung-wook, head of research and development at the firm, said it is making its own controller chip to apply it to next generation NAND Flash solutions during its quarterly earnings conference.

He also said that the company is even considering operating an overseas controller development team on top of its proprietary controller development team here, further hinting at possible merger and acquisitions with other firms.

The statement comes as SK Hynix is getting ready to provide total solutions for next generation chips as the firm is currently purchasing the controller chip for its NAND Flash memory.

The world’s second-biggest dynamic random access memory chipmaker said earlier that it would inject 60 percent of its 4.2 trillion won ($3.7 billion) facility investments in NAND Flash for the first time this year. It had about an 11-12 percent market share in the NAND Flash memory market in the fourth quarter of last year.

The company reported it posted 2.39 trillion won in sales and an operating loss of 260 billion won in the first quarter in its regulatory filing.

The figures indicate that its sales decreased 6 percent from 2.55 trillion won and its operating loss widened from 167 billion won both recorded in the final quarter of 2011. Net loss for the quarter also reached 271 billion won.

“The downturn trend of memory semiconductor prices lasted because of low seasonal demand and intensified competition among suppliers in the market except for PC DRAM,” said SK Hynix officials.

“The bit shipment growth of DRAM and NAND Flash each was 9 percent and 2 percent, but the average selling price declined 10 percent and 16 percent, respectively.”

The price fall of NAND Flash memory is expected to continue throughout the second quarter, however, the firm plans to make that up with a fast transition into next generation 2Y nanometer products and items of converged technologies, according to Kim Ji-bum, head of worldwide marketing and sales division at SK Hynix.

“The firm aims to expand the mass production of the 2Y nanometer and the portion will reach to 20 percent by the second quarter,” its officials said. “Mass production at M12 fab will also begin in the second half.”

Involving its bidding for the acquisition of Japan’s Elpida Memory, SK Hynix took a cautious stance, stating that it will “decide its bid joining following the results of the due diligence.”

“We’re still under the due diligence and we plan to make investments in our possible boundaries,” said Lee Myoung-young, chief of the company’s corporate financial division.

Many analysts here have recently released reports that discuss the risk of taking over the financially-troubled Elpida for SK Hynix. Some even suggested to the executives during the earnings conference that there may be better options ― such as developing its own controller chip for NAND Flash memory ― to reach further growth for the firm.

In the meantime, Toshiba reportedly said it is no longer bidding for Elpida, leaving the competition up to three players ― SK Hynix, Micron and private equity firms U.S.-based TPG Capital LP and China-based Hony Capital. The second round of bidding is expected to take place next week, delayed from the previously scheduled April 27.

By Cho Ji-hyun (sharon@heraldcorp.com)