SK Hynix commits $38 billion to expand South Korean semiconductor capacity
The second-largest RAM and NAND manufacturer will begin production at its first new cleanroom in June 2029, as industry analysts warn of sustained price firmness through 2028.
SK Hynix has announced a capital expenditure of $38.1 billion (54 trillion Korean won) to construct two new memory chip fabrication plants in South Korea. The investment is designed to address the explosive demand for memory products driven by the rapid expansion of AI data centres. The company, which currently ranks as the world’s second-largest manufacturer of RAM and NAND chips after Samsung, stated that the decision followed a thorough review of market demand to seize growth opportunities.
The project involves two distinct facilities. SK Hynix will allocate $24.9 billion (35.2 trillion won) to a new plant in Yongin, which will focus on the production of High Bandwidth Memory (HBM) and other DRAM products. The remaining $13.2 billion (19.1 trillion won) will be directed toward a facility in Cheongju dedicated to manufacturing NAND storage chips. SK Hynix officials confirmed that production at the first cleanroom is scheduled to commence as early as June 2029.
The semiconductor industry is currently experiencing a period of heightened profitability for major manufacturers, including Samsung, SK Hynix, and Micron, due to surging prices for AI-related memory. These price increases have contributed to higher costs for consumer electronics, including smartphones, gaming consoles, and personal computers. SK Hynix is effectively betting on the continuation of the AI boom, despite some analyst concerns regarding the potential for a market bubble.
Industry observers note that the additional manufacturing capacity will not be operational for several years, meaning immediate price relief for consumers is unlikely. Counterpoint Research analyst Neil Shah indicated that memory prices are unlikely to soften before the end of 2028, as demand continues to outpace planned capacity. This trend is further compounded by manufacturers shifting focus away from consumer memory markets towards AI products to maximise profitability.
Micron, for instance, has famously abandoned the consumer memory market to focus exclusively on AI products. Similarly, Samsung and SK Hynix are allocating the majority of their chips to data centre companies. With demand growing even faster than planned capacity, the sector remains tight, and PC builders and other end-users should not expect significant price drops in the near term.
