SK Hynix CEO sees worst memory shortage in 2027, demand to outstrip supply beyond 2030
SK Hynix CEO sees worst memory shortage in 2027, demand to outstrip supply beyond 2030.
SEOUL/NEW YORK, July 10 (Reuters) - SK Hynix Chief Executive Kwak Noh-jung said the global memory industry is heading for its worst-ever supply shortage in 2027, forecasting that demand for memory will continue to exceed the company's ability to produce it well into the next decade despite aggressive capacity expansion.
"We forecast that next year will be the worst year in the industry's history from the supply perspective," Kwak told Reuters in an interview on Friday, the day the South Korean memory chipmaker began trading on Nasdaq.
"Our customer demand continues to go up, while our capacity has limitations," he said. "We still forecast that customer demand will remain higher than our supply capacity even beyond 2030. But we are doing our best to solve the problem."
Kwak's comments follow a stellar debut for the South Korean chipmaker which has become a pivotal company in the AI supply chain by taking the lead in the development of high-bandwidth memory (HBM) used in Nvidia chipsets.
Shares of SK Hynix were up 13.3% at $168.85 on the Nasdaq on Friday afternoon.
Kwak also said the United States remains one of several candidates for future wafer fabrication investment, although no decision has been made.
He said the company would prioritize locations that can provide sufficient land, electricity, water and skilled workers at competitive manufacturing costs.
"If those conditions are met, the U.S., Japan and Southeast Asia are all under consideration," Kwak said. "Nothing has been decided yet. We are evaluating which location can provide the greatest business advantage."
Beyond expanding overseas, SK Hynix's main factories are in Icheon, where it is headquartered, and Cheongju, and it is also building a sprawling facility in the city of Yongin.
Both SK Hynix and Samsung Electronics are participating in a plan by the South Korean government to double the country's memory chip production capacity within five years. That includes investment of 400 trillion won ($266 billion) each for chip production facilities in the southwest of the country.
The plan has rattled some investors, however, who worry it could expose the firms to greater risk should a downturn occur.
In the U.S., it is investing around $4 billion to build an advanced chip packaging factory in Indiana. It is also investing $10 billion to develop an AI solutions company in the U.S., aiming to find new AI growth engines.
Even so, there is some speculation that the AI investment cycle is approaching a turning point, which has been responsible for the recent drag on chip shares.
Concerns have mounted following reports that Apple is seeking to diversify parts of its semiconductor supply chain to include Chinese suppliers, and that Meta is looking to commercialize excess AI computing capacity.
Industry executives and analysts, however, argue that memory supply continues to lag demand.
Nvidia Chief Executive Jensen Huang said last month that shortages of AI memory would continue for several years due to strong demand, adding that SK Hynix would remain the company's largest memory supplier.
UBS likewise expects the global DRAM industry to remain undersupplied until at least the second quarter of 2028.
Similarly, Bank of America remains constructive on the AI investment cycle, estimating that global hyperscaler capital expenditure will reach about $851 billion this year and $1.15 trillion next year, supported by strong cloud backlogs, improving returns on AI investment and growing demand for compute-intensive AI applications.
