SK Hynix weighs sale of China packaging plant in AI memory pivot

South Korean chipmaker SK Hynix’s potential deal to offload a packaging plant in southwest China is part of a strategic pivot towards higher-margin artificial intelligence memory products, according to analysts.

But they cautioned a sale might not be straightforward, as the memory chip giant would need to navigate valuation hurdles and a volatile chip cycle.

SK Hynix said on Monday it was “looking into various solutions to enhance the competitiveness of its packaging business”, after reports emerged last week it was weighing options for its facility in Chongqing, a megacity in China’s southwest.

Those options include bringing in an investor for a stake sale that could value the plant at around US$3 billion, Bloomberg reported. SK Hynix said in a statement that no final decisions had been made.

The Chongqing plant functions as a back-end hub focused on downstream packaging and testing for SK Hynix’s NAND flash memory products. The company also operates two front-end wafer fabrication plants in China for dynamic random access memory (DRAM) and NAND – one in the eastern city of Wuxi and another in Dalian, a busy port in the country’s northeast.

Industry watchers said they considered the potential sale a move to recycle capital away from lower-margin legacy products. Profit growth in high-bandwidth memory (HBM) is far clearer than in standard NAND flash, according to Diana Wang, an analyst at Chinese semiconductor research firm ICWise.

Zhang Guobin, founder of Chinese semiconductor news platform eetrend.com, described SK Hynix’s decision as a strategic shift from low-value back-end assembly to high-margin front-end manufacturing.