SK Hynix is investing $720 billion to build the world’s largest network of memory factories in South Korea, driven by extreme artificial intelligence demand for high-bandwidth memory chips that has transformed traditional industry boom-and-bust cycles.
Surging demand for artificial intelligence infrastructure is rewriting the economics of semiconductor manufacturing. SK Hynix, the world’s leading manufacturer of high-bandwidth computer memory, is undertaking a historic capital expenditure program totaling $720 billion to secure its dominance in the market for specialized chips (reported elsewhere as $712.5 billion in domestic outlays). The company’s market capitalization has jumped more than fivefold in the past year, now topping $1 trillion, as major technology corporations scramble to secure the memory components required to run advanced AI systems.
Yongin Semiconductor Cluster and Cheongju Expansion Plans
The centerpiece of this unprecedented manufacturing push is the massive Yongin Semiconductor Cluster, where SK Hynix is pouring an estimated $389.3 billion into greenfield facilities designed to become the company’s largest dynamic random access memory (DRAM) production site. Unlike single-story fabs standard in other regions, the vertical configuration of these new Korean structures is striking. The first fab at Yongin is designed to reach the height of a 50-story apartment building, incorporating six cleanrooms connected over multiple floors to maximize output efficiency.
Simultaneously, the company announced an additional investment of KRW 100 trillion ($64 billion) directed at its Cheongju campus. That capital will support the construction of the M17 3D NAND fab—slated to begin construction next year with production coming online in 2029 at the earliest—alongside the P&T7 packaging and test facility dedicated to advanced HBM back-end processing. An additional $259.5 billion is earmarked for a planned Southwestern Semiconductor Cluster, though a specific site has not yet been selected.
The HBM Bottleneck and Big Tech Demand
High-bandwidth memory, created by stacking general-purpose DRAM chips, allows rapid data access that helps AI processors execute complex tasks. Because these stacks consume massive amounts of DRAM capacity, consumer electronics supply has grown constrained as artificial intelligence giants commit to long-term purchasing agreements.
“It’s like a war,” said Chey Tae-won, chairman of SK Group, the controlling owner of SK Hynix, in an interview in Seoul. “Everybody wants to buy the memory chips. Without that, they cannot produce their AI computing and AI chips.”
Chey Tae-won, chairman of SK Group
The scramble for components has brought executives from across the technology sector directly to South Korea. SK Group leadership has hosted industry leaders including Microsoft’s Satya Nadella, Google’s Sundar Pichai, and Meta’s Mark Zuckerberg. Meanwhile, Nvidia CEO Jensen Huang and AMD CEO Lisa Su have traveled to the country for meetings regarding memory supply (according to CNBC coverage of the executive visits). Nvidia recently secured a stable supply of HBM and agreed to co-develop next-generation memory as part of a $500 billion deal with SK Group that includes building new data centers with SK Telecom by 2027.
Global Market Dynamics and Competitive Pressures
Market concentration remains exceptionally high. SK Hynix controlled 58% of the high-bandwidth memory market in the first quarter, followed by Samsung and U.S.-based Micron at 21% each, according to Counterpoint Research data. To help finance its infrastructure buildout, SK Hynix reeled in $26.5 billion in July through a share listing on Nasdaq.
Domestic competitors are moving in parallel. Samsung announced plans to spend KRW 140 trillion ($90.98 billion) across its South Korean operations, including expanded OLED production in Asan, five new HBM production lines in Onyang, modernized facilities in Cheonan, and expanded AI server package substrate manufacturing in Sejong.
At the same time, geopolitical and trade boundaries continue to shape supply routes. While SK Hynix operates three fabs in China, U.S. export controls prohibit the company from selling its leading-edge HBM products in that market. This restriction has fostered domestic alternatives, highlighted by the blockbuster Shanghai market debut of Chinese memory maker CXMT, framing the memory buildout as an intense international race (as noted by Counterpoint Research research director MS Hwang).
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