2 weeks ago
SK Hynix bets hundreds of billions on AI memory factories
Computers that use artificial intelligence need a special kind of memory chip called high-bandwidth memory.
This memory helps the computer's brain, the processor, get information very quickly.
Right now everyone wants more AI, so they all want these memory chips.
That means the chips are becoming scarce and expensive.
A company in South Korea called SK Hynix makes most of these chips.
It is now building huge new factories so it can make many more.
One of these factories will be as tall as a 50-storey building.
Big tech companies like Nvidia and Google are asking for memory chips made just for them.
Meanwhile, China is also trying to make its own chips.
Other companies like Micron are building new factories in the United States too.
SK Hynix is investing hundreds of billions of dollars to build what it says will be the world's largest memory-chip manufacturing complex in South Korea.
High-bandwidth memory (HBM) has become a critical AI bottleneck, with SK Hynix holding 58% of the market in the first quarter versus 21% each for Samsung and Micron.
SK Hynix raised $26.5 billion in a July Nasdaq listing, the largest ever by a foreign company in the US, and signed 10 long-term supply agreements with major customers.
Its market value crossed $1 trillion after rising more than fivefold in a year, though its US-listed shares fell about 21% from a July 14 peak to close at $154.41.
US export restrictions bar SK Hynix from selling its most advanced HBM in China, while Micron is building $50 billion Idaho fabs and a $100 billion New York campus.
- Who
- SK Hynix and its parent SK Group, led by chairman Chey Tae-won, along with rivals Samsung and Micron and AI customers including Nvidia, AMD, Microsoft, Google and Meta.
- What
- A race to build the world's largest memory-chip manufacturing complex to satisfy AI-driven demand for high-bandwidth memory (HBM).
- Where
- South Korea, mainly Yongin and Cheongju, with expansion in the US (West Lafayette, Indiana for SK Hynix, plus Micron facilities in Boise, Idaho and Clay, New York) and existing fabs in China.
- When
- Current period: SK Hynix raised $26.5 billion on Nasdaq in July and its US-listed shares closed Wednesday at $154.41, down about 21% from a July 14 peak of nearly $195; major construction runs through 2027-2028.
- Why
- Explosive AI growth has made HBM a critical bottleneck, with AI companies competing for limited supplies and locking in memory contracts far in advance.
China's push for chip self-sufficiency
US-led export controls and competitive fears
China's HBM ambitions
China's push for chip self-sufficiency
China is trying to develop its own HBM capabilities to reduce dependence on foreign semiconductor technology, and Chinese memory maker CXMT recently made a major debut on the Shanghai market.
US-led export controls and competitive fears
US export restrictions prevent SK Hynix from selling its most advanced HBM products in China, and industry analyst Hwang of Counterpoint Research warns China's progress is 'a lot more dangerous than anything else in the world' for the Korean memory industry.
Rising memory prices
China's push for chip self-sufficiency
Chipmakers see surging demand as a boom; SK Group chairman Chey Tae-won acknowledged prices 'went up too fast' and said he hopes industry expansion eventually eases the pressure.
US-led export controls and competitive fears
AI companies and processor makers such as Nvidia face sharply higher costs and are taking greater risks to lock in scarce HBM supplies, while SK Hynix's US-listed shares fell about 21% from their July peak amid volatile investor enthusiasm.
Key facts
- Company
- SK Hynix, controlled by SK Group
- Planned investment
- Hundreds of billions of dollars to build the world's largest memory manufacturing complex
- HBM market share (Q1)
- SK Hynix 58%; Samsung 21%; Micron 21% (Counterpoint Research)
- Nasdaq listing proceeds
- $26.5 billion raised in July, a record for a foreign company in the US
- Market value
- Crossed $1 trillion after rising more than fivefold in a year; shares closed at $154.41, down ~21% from July 14 peak of nearly $195
- Supply agreements
- 10 long-term deals signed in July; Nvidia pact part of a wider $500 billion SK Group deal including SK Telecom data centres by 2027
- Yongin megafab
- First of four planned fabs; built vertically to roughly the height of a 50-storey building with six cleanrooms
- US expansion
- SK Hynix's $4 billion West Lafayette, Indiana packaging plant due by 2028; Micron's $50 billion Boise fabs and $100 billion Clay, New York campus
Quotes
Chey Tae‑won
Chairman of SK Group, controlling owner of SK Hynix
“"It’s like a war. Everybody wants to buy the memory chips. Without that, they cannot produce their AI computing and AI chips."”
financialexpress.com
Sources
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