SK hynix amends securities filing after announcing 1,100 trillion won investment plan

SK hynix has amended its securities registration statement for an American depositary receipt offering after announcing a 1,100 trillion won ($714 billion) investment plan to expand semiconductor production facilities in Yongin, Cheongju and the southwestern region, including two new semiconductor fabs. The company added language warning that the investment could weigh on its financial health.

According to DART, SK hynix resubmitted the ADR-related securities registration statement it had originally filed June 24, updating it to reflect the "mega project" plan announced June 29.

The company added a new risk factor titled "risks associated with the announcement and implementation of our mid- to long-term investment strategy."

"The memory chip industry has traditionally exhibited significant cyclical volatility," SK hynix wrote in the filing. "Given the industry's characteristic of requiring a long lead time before new production facilities come online, global oversupply and price declines have repeatedly occurred when capacity expansions coincide with periods of weakening demand."

The company added that it would be difficult to accurately forecast global memory chip supply and demand conditions at the time its new facilities come into operation. "If, contrary to our expectations, global memory chip demand weakens and oversupply occurs when the facilities become operational, we cannot rule out the possibility that investment in production facilities under our mid- to long-term investment strategy could have a negative impact on our financial soundness," it said, urging investors to take note.

SK hynix also stated that the long-term investment strategy would not affect the intended use of funds raised through a new share issuance and the ADR offering. The company made clear that no specific financing method for the investment has been determined.

On June 29, SK Group Chairman Chey Tae-won attended a public briefing on the government's three major national leap-forward mega projects, held at Cheong Wa Dae, where he announced the 1,100 trillion won investment plan — comprising 600 trillion won for the Yongin semiconductor cluster, 100 trillion won for a new NAND fab in Cheongju, and 400 trillion won for two new semiconductor fabs in the southwestern region.

"Just as a person accumulates more memories as they grow older, demand for memory chips will grow exponentially," Chey said, explaining the rationale for building new semiconductor fabs. "Excessive supply shortages risk shrinking the future AI market, so there is a need to build a foundation for sustained growth without creating such obstacles."