SK Hynix CEO Says CHIPS Act Red Tape Is Too Sticky To Bother

The co-CEO of South Korean chipmaker SK hynix has taken a swipe at the US CHIPS Act subsidy program, labelling the process to apply for funding overly onerous.

SK hynix plans to spend $22 billion on semiconductor and battery manufacturing facilities in the United States. That's just the sort of investment the US wants as it strives to ensure that more of the silicon it needs is made onshore, rather than at the end of stretched and risky supply chains. The CHIPS Act is designed, in part, to promote such investments with some government cash.

But SK hynix vice-chair and co-CEO Park Jung-ho yesterday reportedly told his annual shareholder meeting yesterday that the chip shop considered applying for CHIPS Act funding but "we found the process too demanding."

Park offered that assessment even as he acknowledges that SK hynix's planned stateside investments are for semiconductor packaging facilities, which are less complex than semiconductor manufacturing and therefore will require disclosure of less sensitive information.

His remarks come after South Korea's government warned Washington that the CHIPS Act's requirements for detailed disclosure of technical and financial information are not appreciated by the nation's chipmakers, who fear they'll have to reveal secrets to secure funding. South Korean chip champs Samsung and SK hynix have also chafed at US sanctions that limit the extent of their activities in China – where both have invested billions in manufacturing facilities.

The US last week signaled it would ease the latter concerns, by allowing chipmakers with existing Chinese facilities to expand them by up to ten percent – double the previously-touted five percent limit.

Korean officials described that policy as avoiding the worst-case scenario.

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Park also told the meeting that SK hynix is reviewing all its investments amid depressed demand and prices for semiconductors.

But in a letter from the CEO [PDF], Park talked up the business's prospects.

"In the short run, we will be ready to deal with changes in the macroeconomic landscape including full-scale DDR5 adoption from launch of new CPUs, greater demand for high-performance servers, and the reopening of China," he wrote. "In the longer term, digital transformation – such as AI and autonomous driving – that will make our life much more convenient, must go hand-in-hand with improvements in memory technology and demand. As there is only a handful of companies that can realize such tech-innovation, the memory market will inevitably undergo long-term growth."

Park identified "processing in memory, next-generation memory solutions based on Compute eXpress Link, and computational storage" as the fields he thinks SK hynix needs to pursue, adding the caveat that it won't try to do so by itself.

"Going forward, instead of acting alone, we will engage in close cooperation other global big tech companies and position ourselves as the industry leader in the future AI computing environment," he wrote.

The letter also reveals that SK hynix has "established a dedicated organization … for purpose of sensing geopolitical risks." Park noted that the Korean concern has noticed "intensifying US-China competition, the prolonged Russo-Ukrainian War, and escalating conflict in the Taiwan Strait" and decided it needs to be ready for "the rising possibility of the current global geopolitical landscape to become the new normal, which will evidently lead to increased business uncertainty."

The risk-sensing team will help hynix "identify and respond to global uncertainties in advance." ®