SK Hynix to invest $38 billion to expand AI memory chip production in South Korea

Theindiapostdaily.com – SK Hynix Inc. plans a 54 trillion won ($38 billion) expansion of its chipmaking facilities in South Korea, adding to efforts to rapidly double its production capacity and ease a global shortage of memory chips.The world’s second-largest memory maker will build a new DRAM manufacturing facility in Yongin and a NAND fabrication plant in Cheongju, it said in a statement Friday. The move, covering both dynamic memory for the lowest latency and solid-state storage for fast access to greater quantities of data, is in response to “the continuously growing demand for memory in the AI era,” SK Hynix said.A linchpin of the artificial intelligence infrastructure boom and key partner to Nvidia Corp., SK Hynix has helped drive Korea’s Kospi index higher but in recent times it’s also turned into a source of massive volatility as sentiment around AI shifts between enthusiasm and doubt.

While the company’s production capacity is sold out through 2027 and it’s increasingly securing long-term deals with customers, questions persist about its ability to sustain the enviable profit margins of today over the long run.The new Yongin Y2 will be the second of four fabs planned at the Yongin semiconductor cluster, SK Hynix said. The company intends to break ground on the project in July next year, targeting June 2029 for opening the first cleanroom en route to producing high-bandwidth memory and other next-generation DRAM. The Cheongju M17 expansion will break ground in February and its first cleanroom is targeted for the end of 2028.

The investment period runs through April 2031.SK Hynix, along with Samsung Electronics Co., has made a large commitment to invest further in building up Korea’s domestic manufacturing and AI capabilities. The country aims to double its memory production capacity within five years and secure world-class manufacturing capabilities to pull far ahead of competing nations, the national industry ministry said in announcing a broad plan at the end of June.Seoul-traded shares in SK Hynix closed down 4.9% on Friday, but trimmed losses to 2.1% in post-market trading on Nextrade as of 4:45 p.m. local time.

The moves come after a separate filing that the company will detail shareholder return plans in the third quarter.“The company is actively reviewing additional shareholder return initiatives as part of its ongoing commitment to enhancing shareholder value,” it said in a statement Friday.