SK hynix said Friday that it will start mass producing NAND flash memory chips at its plant in Chongqing City, southwest China, from next month.

The Chinese plant will assemble and test flash-type memory chips that are manufactured at the company's plant in Cheongju, North Chungcheong Province, company spokesman Son Kyung-bae said.

The Chongqing plant will help the firm effectively manage the production of thinner memory chips as SK Hynix, the world's second-biggest memory chip producer, is pushing to advance its chip-making technologies into thinner ones, thereby cutting production costs and being more profitable per chip.

"The Chongqing plant will help us strengthen our competitiveness in the global memory chip market," Son said.

The SK affiliate invested some $150 million in the plant since August last year.

In phased targets, it seeks to record $600 million in sales by next year and 1.6 billion won in 2018. SK Hynix already operates two chip plants in Wuxi, China.

The addition of the new assembly line reflects a stronger global demand.

The global memory chip market came under the control of Samsung and SK Hynix following years of industry restructuring.

NAND flash chips are used in tablets, smartphones, camcorders and car navigation systems.

The Chongqing facility currently has 1,200 employees and the company plans to increase its workforce there.

While SK hynix is the runner-up to Samsung in the global memory chip industry, it is a 1.5-tier player in NAND flash chips, pushing SK's top management to put more focus on flash memory chips to stay competitive.

Last year China became the world's biggest consumer electronics market, supplanting North America's dominant hold on the market.

Specifically in memory chips, China represents over 40 percent of the total chip consumption, annually, meaning that demand for memory chips is increasing.

SK hynix supplies its chips to leading Chinese smartphone manufacturers with some of its NAND flash chips exported to a U.S.-based smartphone designer.

Analysts say the NAND flash chip processing technology will hit the wall at the 10-nanometer level due to limitations of the current 2D floating-gate cell structure.

With supply growth being limited due to a small number of chip makers, SK hynix will employ new technologies to produce chips at lower costs, said a spokesman.

By: DocMemory
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