Science & Technology

SK Hynix Plans Chip Production Expansion

SK Hynix Inc. intends to spend about $14.6 billion on the construction of a complex for the production of memory chips in South Korea.

SK Hynix Plans Chip Production Expansion

The mentioned company plans to expand its production facilities to meet the demand for semiconductors, which are used in the development and subsequent operation of artificial intelligence systems. It is worth noting that currently, the mentioned demand is on a trajectory of rapid and steady growth.

SK Hynix will allocate the first part of the financing intended for the implementation of the specified project to the construction of a new plant by the end of April. In an official statement, the company announced its intention to complete the building of this production facility by November next year.

The planned expenditures of SK Hynix are a reflection and one of the manifestations of the global race for the supply of equipment and components that are necessary for the development of artificial intelligence services. It is worth noting that currently this company is a leader in the area of advanced chips belonging to the high-bandwidth memory (HBM) category, designed specifically for AI systems.

SK Hynix nowadays is taking measures aimed at maintaining its market position. Currently, the company surpasses Samsung Electronics Co. in the supply of HBM chips. These microcircuits demonstrate a high level of performance within a use case involving the application of these products with accelerators from Nvidia Corp. At the same time, Samsung declares its readiness to improve its competitiveness. The company has announced plans to devote huge resources to achieve more meaningful results in the high-end memory area.

Last December, SK Hynix became the second most valuable South Korean firm. Since the beginning of 2024, the company’s share price has shown an increase of 27%. This dynamic is because investors are positive in the context of expectations regarding the prospects of the artificial intelligence industry and the recovery of the IT market, which has recently been in the condition of a downturn, but already signaling a gradual revitalization.

A kind of consensus forecast has been formed in the expert community, suggesting that shortly the demand for HBM chips will show an annual growth of 60%. It is also expected to increase sales of DRAM (Dynamic Random Access Memory) and raise the number of data centers.

SK Hynix plans to build a new plant not far from the existing production base in Cheongju. The company is also expanding its presence in the United States. The firm will spend $3.9 billion to build a plant for the production of advanced packaging and a research center for artificial intelligence products in Indiana.

Returning to the topic of SK Hynix’s activities in South Korea, it should be mentioned that in March 2025, the company intends to begin building the factory in Yongin and complete this process by May 2027.

In 2023, the firm cut its annual investment by 50%. The reason for this decision was named by the company as the downturn in the chip manufacturing area. Also at that time, the firm stated that in 2024, investment growth will be minimal.

As we have reported earlier, South Korea to Invest in AI.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.