President Park Geun-hye, center, applauds leading the dignitaries present at the dedication ceremony for M-14 Line at the SK Hynix Icheon Semiconductor Complex in Icheon, Gyeonggi Province. To her right is Chmn. Chey Tae-won of SK Group. Minister Yoon Sang-jick of the Ministry of Trade, Industry and Energy is also seen to the left of the Chief Executive.(Photo:on the courtesy of Cheong Wa Dae)

President Park Geun-hye kicked off SK Hynix’s “M14” Line, which was dedicated in a ceremony held at the chip company’s Icheon Semiconductor Complex in Icheon, Gyeonggi Province on Aug. 25, leading a group of dignitaries at the ceremony.

The new production line replaces the 15-year-old existing line at the chip plant in Icheon.

In her congratulatory speech, President Park said the dedication of the new M14 Line was made possible due to the reform of out-dated environmental regulations, enabling the replacement of the old facilities. The chief executive said the remaining regulations will be removed. He also stressed that high-tech equipment cannot be effectively utilized unless the out-moded management-labor regulations are removed to pave the way for the uses of the high-tech equipment.

The president continued, urging all corporations in Korea to adopt the salary peak system to create a fair and flexible labor market.

President Park arrived at the chip plant at around 10 a.m. accompanied by Minister Yoon Sang-jick of the Ministry of Trade, Industry and Energy, Gov. Nam Kyung-pil of Gyeonggi Province and Minister Yoon Seong-gyu of the Ministry of Environment, among others. 

They were welcomed by Chairman Chey Tae-won of SK Hynix.

Chairman Chey said in his speech that he will work hard to keep SK Hynix among largest chip makers in the world by building two new chip plants in the next 10 years. With a total investment coming to 49 trillion won, including the cost of the M14 Line, they will be built in Icheon and nearby Cheongju in North Gyeongsang Province. 

It was an exciting moment for the chairman, as it was the first official event since he got out of jail under a special pardon for over 2 million people serving court sentences for their criminal activities. Chey served two years and seven months for a fraud conviction. He personally thanked the president for the pardon as he welcomed her and her party at the ceremony.

The new chip production line is 7.5 times larger than a football field. It produces 200,000 300mm D-ram wafers monthly, which is worth some 55 trillion won in production. 

It employs 210,000 people.

With the new D-ram plant going online, SK Hynix has become the second-largest producer of the chip next Samsung Electronics in the world. 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 even a price war. 

Analysts said SK Hynix's new spending likely would not harm the industry's profitability, given it will be spread over a long period of time. Spending for the new plants will likely fall well within the firm's typical capital expenditures, they said. 

SK Hynix said it would consider market conditions before deciding on specific construction plans for the new plants, suggesting a conservative approach. 

"The memory chip industry is already firmly controlled by a handful of companies, so there's no reason for any parties involved to start a game of chicken," said HMC Investment analyst Greg Roh, adding that SK Hynix's investments were in line with rivals like Samsung.

SK Hynix shares were up as much as 9.3 percent on Aug. 18, touching a one-week high as the announcement eased worries that the firm might invest too aggressively. 

The new plants are part of a 49 trillion won investment plan first announced by conglomerate SK Group that controls SK Hynix last week. The plan includes 15 trillion won earmarked for the M14 DRAM chip plan in Icheon, a city southeast of Seoul. 

The company said the M14 plant, the largest single DRAM production plant in the world, would start making chips during the current quarter.