SK Hynix Inc, the world's number-two DRAM chip maker, on Tuesday said it plans to spend 31 trillion won ($25.94 billion U.S. ) to build two new chip plants in South Korea, aiming to update its production technologies to boost competitiveness.
The firm, which competes with rivals including Samsung Electronics Co Ltd, Micron Technology Inc and Toshiba Corp, said the plants would be completed by 2024 but did not comment on what they would make or when they would begin production.
The memory chip industry has enjoyed robust profits in recent quarters, in part due to careful capacity management by major manufacturers like Samsung and SK Hynix. Investors are closely watching new capital investment, as aggressive spending could trigger oversupply or a price war.
Analysts said SK Hynix's new spending likely would not harm the industry's profitability, given it is spread over a long period of time. They added that pending for the new plants will likely fall well within the firm's typical capital expenditures.
SK Hynix said it would consider market conditions before deciding on specific construction plans for the new plants, suggesting a conservative approach.
SK Hynix shares were up as much as 9.3% in early Tuesday trade, touching a one-week high as the announcement eased worries that the firm might invest too aggressively.
