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UPDATE 1-SK Hynix may build new chip production line in S.Korea

Wednesday, 18 Dec 2013 | 12:53 PM ET

SEOUL, Dec 18 (Reuters) - South Korea's SK Hynix Inc will invest 15 trillion won ($14.27 billion) to build and buy new facilities for dynamic random access memory (DRAM) production in Icheon from 2014 to 2021, newspaper Chosun Ilbo reported on Wednesday, citing an unnamed high-ranking government source.

Shares of U.S. memory semiconductor maker Micron Technology dropped more than 6 percent due to concerns that an increase in the global supply of DRAM could hurt chip prices in the highly cyclical memory industry.

Hynix, the world's second-biggest memory-chip maker, said that it is considering building a new plant to replace an aging production line in the city of Icheon, southeast of Seoul.

A spokeswoman for SK Hynix declined to comment on how much the company will invest in the new production line.

The move comes after SK Hynix, which trails Samsung Electronics, posted two quarters of record profit for July to September, benefiting from a rally in the memory-chip market driven by the boom in smartphones.

"We believe the directional move in Micron shares today is correct but the magnitude is overdone. We still believe DRAM supply is in structurally better shape now than it has been in decades," Raymond James analyst Hans Mosesmann wrote in a note to clients.

SK Hynix currently has a production line called "M10" in Icheon, which started work in 2005. It has three other plants in the city of Cheongju in South Korea and one in China's Wuxi.

Micron's stock was down 6.67 percent at $21.38.

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