SK Hynix Pledges Major Expansion of AI Memory Chip Production Amid Soaring Demand

In a clear sign of how artificial intelligence is reshaping global technology supply chains, Chey Tae‑won, chairman of SK Group and parent of SK Hynix, pledged this week to significantly increase production of AI-focused memory chips in response to unprecedented demand from data centres and major cloud operators. The comments, made at an industry conference in Washington, highlight the soaring need for specialised memory components that power modern AI workloads — and underscore how memory supply constraints have become a central issue in the broader AI boom.

Memory chips — particularly high-bandwidth memory (HBM) — have become essential inputs for modern AI hardware. These chips sit alongside processors in AI accelerators to feed data at high speeds, enabling systems that train and run large language models and other computationally intensive applications. Chey described HBM as a “monster chip,” pointing to how this category has driven enormous profits and stratospheric growth for SK Hynix over the past year.

Exploding Demand from Data Centres and Tech Giants The push for more memory capacity has been driven by a wave of infrastructure spending by major tech companies. Firms such as Microsoft Corporation, Meta Platforms, and others are investing heavily — with roughly $650 billion earmarked this year for cloud and AI infrastructure alone — to expand global data centre footprints. These facilities require vast quantities of memory to support training clusters, inference servers and other AI workloads, leading to a supply crunch that has rippled across the semiconductor market.

As a result, SK Hynix’s memory chip production is fully sold out for 2026, according to company disclosures and market reports. Its South Korean rival Samsung Electronics and US-based Micron Technology face similar sell-outs in their HBM portfolios, reflecting tight supply conditions industry-wide.

Record Earnings and Stock Market Surge SK Hynix’s dominant position in the AI memory segment has translated into a remarkable financial performance. Over the past year, the company’s stock price has more than quadrupled on the back of record earnings. Analysts forecast that operating profit could exceed $70 billion in 2026, with some projections pushing above $100 billion — though the company’s chairman cautioned that such estimates could just as easily reverse if market conditions shift.

The company’s strong performance reflects broader industry dynamics: the rapid expansion of generative AI services, greater cloud adoption, and specialised hardware deployments have all contributed to a structural reshaping of semiconductor demand. Memory chips, especially high-performance variants like HBM, have become strategic assets rather than commodity products.

Production Plans and Capital Expenditure To meet the surging demand, SK Hynix said its capital expenditure in 2026 will rise significantly compared to last year. While the company has not provided a specific figure, the increase will support the expansion of HBM production lines and associated infrastructure. Some industry analysts point to ongoing investments in advanced packaging and fabrication facilities — such as a recently approved $13 billion high-bandwidth memory packaging plant — as evidence of SK Hynix’s commitment to increasing capacity.

These plant expansions are critical because memory production — particularly HBM — involves complex processes beyond raw wafer fabrication. Advanced packaging, interposer technologies and specialised assembly lines are essential to stack memory dies with the high throughput and low latency that AI applications demand.

Market Imbalances and Industry Challenges Despite booming demand, the memory chip market faces structural imbalances. Consultant TrendForce estimates that global demand for HBM will increase by more than 70 percent in 2026 alone. But expanding capacity is a multiyear endeavour due to the intricate nature of memory manufacturing, meaning supply shortages could persist even as cash flows and profits surge.

This dynamic has consequences beyond the server room: as memory production prioritises high-margin AI chips, supplies of other types of memory — such as consumer DRAM used in PCs, smartphones and gaming consoles — have tightened. This shift has contributed to higher prices for everyday memory products, prompting concerns about affordability and broader ripple effects in electronics markets.

Strategic and Long-Term Considerations Chey’s remarks also touched on longer-term strategic challenges, including energy demands associated with AI infrastructure. Memory production and data centre expansion both require significant power resources, and SK Group has discussed exploring co-located energy infrastructure to ensure stable supply.

In addition to boosting production, SK Hynix is also exploring expansion into new markets with dedicated AI solutions units, including potential facilities and ventures in the United States. Such moves reflect broader efforts among Asian semiconductor firms to deepen ties with global tech ecosystems and diversify beyond traditional manufacturing paradigms.

Looking Ahead SK Hynix’s pledge to expand AI memory chip production underscores the central role of memory technologies in the ongoing AI revolution. With investment in AI infrastructure expected to remain high for years, and with data-intensive workloads only growing in scale and complexity, memory producers are likely to remain at the heart of global technology supply chains.

However, the challenges ahead — from capital intensity and energy demands to balancing HBM expansion with other market segments — reveal that the AI memory boom is as much about strategic agility as it is about raw output. In an industry where winning the hardware race increasingly determines who leads in artificial intelligence, SK Hynix’s moves this year could shape the future of memory production for the decade to come.