The hunger for chips: SK Hynix launches a huge investment

SK Hynix announced today, Friday, that it will invest 54 trillion Korean won ($38.1 billion) in two new memory chip plants. The move comes against the backdrop of growing demand for these components, which are essential for the operation of artificial intelligence (AI).

The South Korean technology giant announced an investment of 35.2 trillion won in a production plant in Yongin to be called Y2, and 19.1 trillion won in a plant to be built in Cheongju to be called M17. This decision follows a surge in memory chip prices driven by limited supply and massive demand from companies building AI infrastructure, such as data centers, as well as chip manufacturers like Nvidia that require large amounts of high-bandwidth memory.

The rise in demand has boosted the share value of memory chip manufacturers such as SK Hynix, Samsung, and Micron, as investors forecast that the supply-demand gap will persist. SK Hynix is facing fierce competition from Samsung, which took the industry's top spot in sales of dynamic random access memory (DRAM) in the second quarter.

"This has led the company to invest new resources in strengthening its hold. This will not increase SK Hynix's output in the immediate term, and will be reflected from 2029 onwards," said Neil Shah, Vice President of Research and co-founder of Counterpoint Research.

He further noted:

"Looking at the market as a whole, the expansion of companies like Samsung, SK Hynix, Micron, and CXMT will lead to a significant increase in global supply during 2028. But with the continued growth of demand in parallel, memory chip prices are not expected to fall before the end of 2028."

Yongin Y2 is the second of four plants that SK Hynix plans to build in the area and will be used for DRAM production. Construction work is expected to begin in July 2027, with production slated for 2029.