SK Hynix announced its intention to invest 100 trillion won ($64.38 billion) to construct new NAND memory chip and packaging facilities as part of a significant investment initiative aimed at tackling a shortage fueled by the AI surge.
The initiatives in Cheongju, the central city of the country, presented on Thursday are part of a $2.1 trillion strategy revealed by the chipmaker and its local competitor Samsung Electronics on Monday, which also featured a new chip cluster in the southwest and ongoing projects.
South Korea anticipates that the investments will increase the nation's memory chip production capacity twofold in five years.
During a Thursday event with South Korea's president present, SK Hynix CEO Kwak Noh-jung announced that the company plans to invest 80 trillion won to establish a new factory for NAND memory chip manufacturing by 2029, along with 20 trillion won for a chip packaging facility by late 2027 in Cheongju.
The announcement of a plan to invest 100 trillion won in Cheongju was made on Monday, but specifics regarding the investment were not disclosed then.
The significant capacity expansion by South Korean chip manufacturers is a considerable political success for President Lee Jae Myung, although it is raising concerns about a harsh response if AI investment declines.
Also Read: New PM Vows to Fast-Track Korea's AI Push on First Day in office
SK Hynix stock fell 7.1percent and Samsung stock decreased 8.6percent on Thursday, affected by a worldwide selloff in semiconductor companies as Meta Platforms’ intention to offload computing power stirred concerns about surplus AI computing capacity.
However, during the SK Hynix event, Kwak showed confidence in the NAND market, a storage chip that maintains data when a device is powered off, in contrast to a DRAM chip.
Also Read: Indonesia Eyes Carbon Incentives for Green Ports
"Although the demand for NAND has been rising and is anticipated to keep increasing, the supply of NAND is limited," he noted.
Also Read: Japan Supercharges AI and Robotics with $ 6.1 Billion Plan
SK Hynix announced its intention to commence the construction of the new Cheongju NAND facility, referred to as M17, in the upcoming year.