SK Hynix Accelerates New Chip Factory Opening Amid Memory Demand Surge

SK Hynix's New Factory Plans

SEOUL/SAN FRANCISCO, Jan 15 (Reuters) - SK Hynix plans to accelerate the opening of a new factory by three months and will also begin operating another new plant in February, a senior executive said, as surging memory demand pressures global supply.

The South Korean chipmaker's decision comes as a global memory chip shortage has driven up prices of consumer gadgets like phones and PCs and slowed the construction of data centers needed to power artificial intelligence.

"We have to support memory consumption for AI infrastructure," said Sungsoo Ryu, CEO of SK Hynix America, in an interview with Reuters.

Global Memory Chip Market Overview

Ryu said his company, a key Nvidia supplier, would open the first factory at its new chip facility in Yongin, South Korea, three months early in February 2027. In addition, it plans to begin deploying silicon wafers next month into a new fab, M15X, in Cheongju, South Korea, to produce high-bandwidth memory (HBM) chips.

Long-Term Supply Agreements

HBM chips are used by Nvidia, Advanced Micro Devices and other firms to build the systems needed for AI applications.

Reuters is reporting SK Hynix's decision to move up its timetable at the Yongin facility for the first time. A local media outlet earlier reported on the firm's HBM production plan, citing unnamed industry sources.

The fab in Yongin, 40 km (25 miles) south of Seoul, is part of the company’s planned 600 trillion won ($407 billion) investment in its "Semiconductor Cluster," which will eventually house four fabs.

LONG-TERM AGREEMENTS

Ryu declined to provide details on the production capabilities at the phase-one Yongin fab, but said the additional capacity would be "very helpful" in meeting customer demand.

Analysts estimate the first fab in Yongin would be comparable in current capacity terms to the company's complex at Icheon, which is home to several factories.

Investment in Semiconductor Cluster

Ryu said customers, including hyperscalers, are increasingly seeking multi-year supply agreements - a shift from the one-year contracts that were more common in the past - as they scramble to lock in long-term supplies.

The global memory chip market is experiencing an unprecedented boom, with prices of some products surging more than 300% in the fourth quarter alone from a year earlier, according to data from market tracker TrendForce, as surging demand for AI infrastructure strains production capacity.

Ryu said SK Hynix is reviewing production plans for its products on a monthly basis to ensure its ability to support customers.

"Structural changes are happening now (in the memory chip market)," Ryu said, adding that he has not seen signs of a slowdown in demand.

"We are seeing a lot of tremendous and humongous demand," he said.

Shares of SK Hynix, the world's second-largest memory chipmaker after Samsung Electronics, have jumped 280% over the past year.

($1 = 1,475.6800 won)

(Reporting by Heekyong Yang in Seoul and Max A. Cherney in San Francisco; Editing by Miyoung Kim and Thomas Derpinghaus)