SK hynix Inc. plans to build a new semiconductor back-end process facility in central South Korea to enhance its chip-packaging capabilities, industry sources said Tuesday.

According to the sources, the company announced in an internal posting that it will demolish an existing building at its factory site in Cheongju, about 110 kilometers south of Seoul, to construct a new "Package & Test (P&T) 7" facility. SK hynix acquired the Cheongju site from LG Electronics Inc. about a decade ago.

The demolition is expected to be completed by September, they said.

Once completed, the new plant will become SK hynix's seventh P&T facility, including one in China.

P&T facilities handle the back-end semiconductor process, finalizing individual chips from wafers processed in the front-end stage and packaging them into finished products.

As further performance gains through process miniaturization have become increasingly difficult, advanced packaging has emerged as a key technology to enhance chip performance and energy efficiency.

This is especially critical for high bandwidth memory (HBM), which stacks multiple dynamic random access memory (DRAM) chips. As the number of layers increases, packaging technologies that address heat dissipation and warping are becoming more essential.

"We are demolishing the existing building to make use of the land we currently own," an SK hynix official said. "We are considering using it as a product testing facility, but nothing has been decided yet."