April 25, 2024

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The headquarters building of SK Siltron in Gumi, North Gyeongsang Province (SK Siltron)

SK Siltron, South Korea’s sole silicon wafer maker for chips, plans to spend a combined 1.05 trillion won ($845.61 million) to build a new fab that manufactures 300-millimeter wafers in order to address a chip shortage, a filing showed Wednesday.

With the board’s approval Tuesday, the supplier aims to embark on the fab construction in the first half at a 42,716-square-meter site in Gumi, North Gyeongsang Province, and create more than 1,000 jobs there.

SK Siltron, which supplies to the country’s chip powerhouses Samsung Electronics and SK hynix, aims at starting mass production in the first half of 2024.

A wafer -- a round slice of pure semiconductor material including silicon -- is used as a substrate where multiple microchips are printed before dicing. A 300-millimeter diameter wafer is the industry’s largest in size to be commercialized thus far. More chips can be produced in a single wafer as a wafer gets larger.

SK Siltron’s silicon wafers have come in the sizes of 200 millimeters and 300 millimeters, and are used as a base material for memory chips, logic chips and complementary metal–oxide–semiconductor image sensors.

An upshot in chip demand thanks to the growth of the electric vehicle market and an increase in 5G network usage has prompted the decision to expand the 300-millimeter wafer production, SK Siltron said, adding the wafer shortage is forecast to last until 2026.

“We have reached a decision on the capital expenditure on the facility scale-up in an audacious manner to predict the uncertainties in the market landscape and address them with dexterity,” SK Siltron Chief Executive Officer Jang Yong-ho said in a statement.

The committed total capital expenditure for the expansion takes up a third of its assets as of 2021, according to the company.

SK Siltron is considered one of the five major wafer makers along with Japan-based Shin-Etsu Chemical and Sumco, Taiwanese firm Global Wafers and Germany’s Siltronic, which account for nearly 95 percent of the global market share if combined.

Its home country Korea is the second largest by wafer capacity just behind Taiwan, according to market researcher IC Insights. Nearly 60 percent of SK Siltron’s revenue has come from memory chip giants Samsung Electronics and SK hynix.

The company also oversees the operations of heat-withstanding silicon carbide wafers, following a 2020 acquisition of a former DuPont subsidiary in the United States.

SK Siltron is a subsidiary of SK Inc., a holding company of Korea’s third-largest conglomerate dedicated to chips, chemicals and telecommunications. The company was formerly owned by rival LG until 2017.

By Son Ji-hyoung (consnow@heraldcorp.com)