2027 will have worst memory supply crisis, predicts SK Hynix CEO

SK Hynix Chief Executive Kwak Noh-jung said the global memory industry is headed for the worst supply crisis in history in 2027, predicting that demand will continue to outpace the company's production capacity for much of the next decade despite aggressive capacity expansion.

"We predict that next year will be the worst in the history of the sector in terms of supply," Kwak said in an interview with Reuters this Friday, the day the South Korean memory chip maker began trading its shares on the North American Nasdaq.

"Demand from our customers continues to increase, while our capacity has limitations," he said. "We still anticipate that customer demand will remain in excess of our supply capacity even beyond 2030. But we are doing our best to resolve the issue."

Kwak's comments come on the heels of a stellar debut for the South Korean chipmaker, which has become a key player in the artificial intelligence supply chain, leading the development of the high-bandwidth memory (HBM) used by Nvidia.

US wafer fab under review
Kwak also stated that the United States remains one of several candidates for future investments in chip wafer manufacturing, although no decision has been made.

He stated that the company will prioritize locations that can provide sufficient land, electricity, water and skilled labor at competitive production costs.

"If these conditions are met, the US, Japan and Southeast Asia are being considered," Kwak said. "Nothing has been decided yet. We are evaluating which location could provide the greatest commercial advantage."

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In addition to international expansion, SK Hynix's main factories are located in Icheon, where its headquarters are located, and Cheongju, and the company is also building a large facility in Yongin City.

Both SK Hynix and Samsung Electronics are participating in a South Korean government plan to double the country's memory chip production capacity within five years. This includes an investment of 400 trillion won ($266 billion) in each of the chip factories in the southwest of the country.

The plan, however, has left some investors apprehensive, as they fear it could expose companies to greater risk if a recession occurs.

In the United States, the company is investing around US$4 billion in the construction of an advanced chip packaging factory in Indiana. It is also investing $10 billion in developing an AI solutions company in the US, with the aim of finding new growth drivers for the AI space.

Source: CNN