In a sign of the growing demand for memory chips driven by AI’s growth, SK Hynix plans to spend approximately $38 billion to build two semiconductor fabrication facilities in South Korea, a major expansion for the company.

The company’s board approved investments totaling 54.3 trillion won, with 35.2 trillion won allocated to a new fabrication plant in Yongin and 19.1 trillion won for a facility in Cheongju. The two plants will expand production across the two major memory categories, DRAM and NAND.

The scope of the investment suggests that the company believes that the AI infrastructure buildout will continue to drive demand for memory well into the decade. The planned fabrication plants will not add meaningful production capacity until 2028 or 2029, even as memory customers face a constrained market today.

Although Samsung, SK Hynix, Micron and China’s CXMT are all expanding capacity, many experts expect demand to outpace the additional supply. Industry forecasters say that memory prices are unlikely to ease before the end of 2028.

Longer-term forecasts also support SK Hynix’s decision. Citing research firm Omdia, the company said demand for DRAM and NAND is projected to grow 19% annually through 2030.

“Capex intensity was a shortcoming of SK Hynix’s I called out at the ADR listing,” Brendan Burke, Research Director at The Futurum Group, told Techstrongsemi. “If the company believes in durable demand for memory and in its own product innovation, they should invest more than 11% of revenue in capex.”

“Micron is in the low twenties and Samsung’s chip division is mid-to-high twenties. Raising this year’s capex to about $34 billion and adding $38 billion on top gets them into the mid-teens, making progress toward the peer group. Of course, when revenue grows 257%, the denominator runs away faster than anyone can pour concrete, so they’ll keep screening as underinvested even while spending records. And the harder issue is finding US capacity to ease government and customer pressure.”

Expansion Amid Intense Competition

SK Hynix’s Yongin facility, known as Y2, will manufacture HBM and other next-generation DRAM products. Construction is scheduled to begin in July 2027, with the first cleanroom expected to open in June 2029.

Y2 will be the second of four fabrication plants planned for the company’s Yongin Semiconductor Cluster. SK Hynix has outlined a long-term plan to invest 600 trillion won in the cluster.

The Cheongju facility, called M17, will focus on NAND, the nonvolatile memory commonly used for data storage. Construction is expected to start in February 2027, followed by the opening of its first cleanroom in December 2028. SK Hynix has allocated another 100 trillion won under its longer-term plan to expand its Cheongju production base.

Competition among the major memory manufacturers remains intense. Samsung regained the leading position in the global DRAM market by share during the second quarter, according to Counterpoint Research. SK Hynix also competes with Samsung and Micron in HBM, a market that has become more important as tech companies pour capital into AI infrastructure.

AI data centers require huge amounts of memory to support computationally intensive workloads. High-bandwidth memory (HBM), a form of DRAM, has become particularly important because it works alongside advanced AI processors, including chips from NVIDIA. The resulting demand has helped create tight memory supplies and higher prices.