As a major supplier of Nvidia's high-bandwidth memory (HBM) products, SK Hynix plans to spend $13 billion to build a chip packaging plant in South Korea to cope with the surge in demand for artificial intelligence chips. The South Korean memory chip maker said on Tuesday it would spend 19 trillion won to build an advanced AI chip packaging and testing factory in Cheongju, south of Seoul.
The new factory is scheduled to start construction in April and is expected to be completed by the end of 2027. It will increase SK Hynix's chip packaging production capacity in South Korea. The company is also building factories in the United States.
According to a statement released by the company, SK hynix is "actively responding to the growing demand for HBM" at a time when AI storage demand is surging. The company said it expects the HBM market to grow at an average annual rate of 33% from 2025 to 2030.
HSBC analyst Ricky Seo said in a research note on Tuesday that SK Hynix will continue to benefit from what he called a "memory chip super cycle" that could last four to five years. He said that factors supporting this optimistic outlook are strong AI investment supporting solid HBM shipments, as well as strong market demand for traditional general-purpose DRAM chips.
Seo said the chipmaker is expected to report record fourth-quarter earnings. He said the company's operating profit in the October-December period is expected to surge 57% from the previous quarter to a record 18 trillion won, and its DRAM and NAND chip prices may have increased by 25% and 20% respectively.
Seo added that the South Korean won's weakness against the U.S. dollar may also have boosted SK Hynix's quarterly earnings. The company is expected to report results later this month.
After recent gains, SK Hynix shares fell 1.6% in late trading on Tuesday on profit-taking. Nonetheless, the stock is up about 13% year to date.