South Korea’s second largest memory chipmaker SK Hynix Inc. formerly announced starbusting its foundry business and named the new independent subsidiary SK Hynix System IC and its chief executive Kim Jun-ho, current SK Hynix President.

In a regulatory filing on Wednesday, SK Hynix said the foundry will be wholly owned by SK Hynix. SK Hynix System IC will officially start operation on June 30 in Cheongju, North Chungcheong Province, where SK Hynix’ manufacturing facilities are located.

According to sources, Kim would become its first CEO. The former prosecutor who had passed the bar exam in 1982 worked for the Seoul Central District Prosecutor’s Office, Supreme Prosecutor’s Office and Ministry of Justice. He had joined SK Group in 2004 as an executive vice president of the group’s ethical management division, and served as president at SK Energy and SK Telecom. He has been credited for spearheading the group’s acquisition of Hynix Semiconductor in 2011.

SK Hynix System IC will have about 1,300 employees, including agency workers. Some of the managerial executives of SK Hynix’ manufacturing and marketing departments will also move to the new entity.

Through the spin-off, SK Hynix aims to beef up its competitiveness in the global foundry industry that is expected to expand rapidly on explosive demand for chips to power Internet of Things (IoT) and artificial intelligence (AI). Foundry is a business that does consignment production for chips. The new subsidiary will start its business at an initial capital of 343.3 billion won ($306 million).

“We decided to split the foundry business to reinforce our competitiveness as a system integrated circuit (IC) powerhouse and achieve sustainable growth,” said an official from SK Hynix.

At 01:10 p.m. in Seoul trading Thursday, shares of SK Hynix were up 0.7 percent at 56,200 won.

By Lee Dong-in

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