SK hynix Warns Memory Supply Will Be Tightest Next Year

Amid mounting U.S. pressure to expand local investment, SK hynix (000660.KS) has formalized the possibility of investing in a memory production facility in the United States. Observers say the scale of U.S. investment could expand to hundreds of trillions of won if a production base is eventually established.

Chey Tae-won, chairman of SK Group, said on the 10th in New York in an interview with CNBC during an event marking the company's ADR listing, "In addition to the advanced packaging facility in Indiana, we are reviewing further investment." He added, "Building a memory production plant is also possible if conditions such as power, water, workforce and supply chain are in place."

Chairman Chey added that beyond a memory plant, investments worth tens of billions of dollars could also be made in artificial intelligence (AI) data centers and related technologies, as well as joint ventures. SK hynix is currently building an advanced packaging production base in West Lafayette, Indiana, with an investment of $3.87 billion (about 5.6 trillion won), and is expanding its local AI business, including the establishment of an AI solutions company, "AI Company" (tentative name), in the United States earlier this year.

The remarks have drawn particular attention as they came right after U.S. Commerce Secretary Howard Lutnick the previous day publicly urged Samsung Electronics and SK hynix to expand memory production in the United States. Secretary Lutnick said at Micron's New York plant event, "I want to bring Samsung Electronics and SK hynix to the United States and have them build production facilities."

Behind the U.S. demand for expanded memory production facilities is a strategy to reorganize the supply chain for chips that are key to the AI era around the United States. The Trump administration is pursuing policies to expand semiconductor manufacturing within the United States and build a U.S.-centered AI core supply chain.

The outlook that the memory chip supply shortage will be prolonged is also lending weight to the demand for expanded local production. Kwak Noh-jung, CEO of SK hynix, said in an interview with Bloomberg and Reuters on the day of the ADR listing, "In terms of supply, next year will be the most difficult year in the industry's history," suggesting the current memory supply shortage could continue beyond 2030. He explained that customers are entering into long-term supply contracts because they also expect the supply shortage to be prolonged. The market also sees AI memory shortages continuing for several years and expects SK hynix to maintain its position as the largest supplier.

Late last month, SK hynix announced a plan to build a 1,100 trillion won domestic AI memory production belt centered on the Yongin semiconductor cluster, Cheongju and the Honam region. The industry sees a strong possibility that the U.S. government will demand further investment expansion, given that the scale of U.S. investment is relatively small compared with such large-scale domestic investment. In particular, some observers say the United States could use measures such as semiconductor tariffs as a negotiating card to pressure global chip companies into local production.

As Chairman Chey directly mentioned the possibility of building a memory production plant in the United States, the industry is focusing on whether specific investment plans will follow.