By Kate Yuan

(JW Insights) May 5 -- South Korea's SK Hynix plans to expand its legacy chip production capacity at its chip manufacturing facilities in Wuxi of eastern China’s Jiangsu Province, Reuters reported on May 4, quoting a report by market research firm TrendForce.

Meanwhile, the Financial Times reported on May 3 that the US government has signalled to Samsung and SK Hynix, two of the world’s leading producers of memory chips, that it will extend permission for them to send US chipmaking tools to China.

For SK Hynix as the world's second-biggest memory chip maker, its long-term strategy involves shifting its capacity expansion back to South Korea, while its Wuxi chip production site caters to domestic demand in China and the legacy DRAM memory chip market, the TrendForce report said.

SK Hynix had planned for its Wuxi factory to lower the output of legacy chips, but it had instead decided to increase production capacity of them due to the U.S. curbs on exports of chip-making equipment to China, requiring licenses for U.S. companies to export advanced chips and chip-making equipment in a bid to slow China's technological advance.

In March, SK Hynix's chief executive said it will ask the United States for a year's further exemption from the curbs.

Last year, SK Hynix said it had received authorisation from the U.S. Commerce Department for a year to supply equipment needed for chip production in facilities in China, without seeking additional licensing requirements, Reuters reported.

Four people familiar with the situation told Financial Times that the US had now sent a clear message that the Korean producers would be given another waiver for their plants in China for at least another year.