SK hynix plans £3B investment in South Korea chip factory

South Korean memory chipmaker, SK hynix, said it will invest £3 billion ($3.86 billion) to build a chip factory for a new random access memory (DRAM) chip production base in Cheongju, North Chungcheong Province, South Korea.

SK hynix said it intends to begin construction of the M15X chip factory at the end of April, preparing for mass production in November of next year. 

The total investment in the production base is expected to be more than £11.6 billion ($14.5 billion) in the long term which includes a planned gradual increase in equipment investments.

Last year, the NVIDIA supply cut annual investment by 50%, citing the chip sector downturn as the cause for the decision. The company said in October that increases in 2024 will be kept to a minimum.

Despite investment constraints, demand for SK hynix high-bandwidth memory (HBM) chips, vital for GPU-based AI training, is so high that the company’s current capacity is fully booked for this year and a substantial portion of next year.

The new production base will focus on increasing DRAM capacity, particularly in HBMs, which SK Hynix forecasts to experience over 60% annual market growth. Demand for general DRAM is also expected to rise steadily, especially for high-capacity chip products for servers.

SK hynix Banks on AI Memory Chips

Earlier this month, SK hynix said it will invest £3 billion ($3.87 billion) to construct an advanced packaging plant and artificial intelligence (AI) product research and development facility. The new plant will be situated in Indiana in the US and include an advanced chip production line to mass-produce next-generation HBM chips. 

In January, the South Korean chipmaker said it has the potential for its market value to double in three years to £119.2 billion ($152 billion) through its AI memory chips. 

CEO of SK hynix, Kwak Noh-Jung, said the significance of memory will increase with the growing prevalence of Generative AI. He added that with the evolution of AI systems, there will be a diversification in customer demands for memory.

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