SK Hynix to spend $38 billion on two new chip fabs

SK Hynix is spending $38 billion to build two new chip fabs in South Korea, aiming to address a global shortage of memory chips. The South Korean corporation, one of the world’s three largest memory manufacturers alongside Samsung and Micron, plans to spend 54 trillion won on the new “Y2” and “M17” facilities. These projects represent a major shift in strategy for the company, which has previously been criticized for hesitating to expand production capacity.

The new plants are part of a larger investment strategy totaling 700 trillion won. The Yongin Y2 is the second of four new fabs planned for the Yongin Semiconductor Cluster. Construction is expected to begin in July 2027, with the first cleanroom ready by June 2029. That facility will house equipment required to produce high-bandwidth memory solutions and “next-generation” DRAM chips.

Meanwhile, construction of the Cheongju M17 plant is expected to begin in February 2027. The facility is scheduled to open its first cleanroom in December 2028. Production at M17 will focus primarily on NAND Flash chips.

SK Hynix acknowledges that HBM memory is now one of the most sought-after chip formats in the world. Nvidia, AMD, and other vendors are struggling to secure enough capacity to keep developing and producing new GPUs and AI accelerators for data center hyperscalers. Analysts say that new data center plans are still on paper for the most part, while Big Tech companies continue to buy up every memory chip they can find.

SK Hynix also said that demand for NAND flash is surging rapidly. The focus is once again on hyperscalers and enterprise SSDs, which are being deployed to further expand the capacity and capabilities of AI services. NAND chips are used as cache storage in AI inference workloads, with agentic AI and physical AI applications such as robots expected to drive demand even higher.

The new fabs are a direct response to this intense pressure on the supply chain. As the company builds these physical facilities, the reality for data center managers is that every inch of new silicon must be justified by a concrete expansion of compute resources rather than speculative growth. This capital expenditure signals that SK Hynix is betting heavily that the current rush for AI-capable hardware will mature into sustained, rather than fleeting, demand.

Commenting on the newly announced construction plans, an unnamed SK Hynix official said that the company aims to become “a key partner in AI infrastructure, contributing to the stability of the global AI semiconductor supply chain.”

Memory manufacturers have long been criticized for their alleged unwillingness to build new manufacturing capacity, with SK Hynix predicting that the supply chain crisis will likely peak between 2027 and 2030. The new Y2 and M17 plants will certainly increase the company’s production capacity, although they should come online just as the market finally begins to settle down.