As demand for DRAM surges on the back of growth in the artificial intelligence (AI) industry, SK hynix is going all out to increase production next year. The company plans to make maximum use not only of the newly expanded Cheongju M15x fab (factory) but also the remaining space in existing fabs, the conversion of production lines to advanced processes, and available space in older fabs. SK hynix is also said to be reviewing an upward adjustment to its existing capacity expansion plan to meet demand.
According to the industry on the 28th, next year SK hynix is expected to use the Cheongju M15x expansion, partial line conversion investments at the Icheon M14 fab, remaining space at the Icheon M16 fab, and available space at older fabs such as the Cheongju M8 and Icheon M10 to expand commodity DRAM capacity. With the Cheongju M15x fab projected to focus on high bandwidth memory (HBM) production, the company is known to be pursuing these measures to respond to commodity DRAM demand.
SK hynix said in its third-quarter earnings conference call that next year's commodity DRAM is "sold out." This means all commodity DRAM volumes that can be produced with the current capacity and preplanned capital expenditures have been fully sold. Reflecting this demand uptrend, prices are climbing steeply. According to market researcher TrendForce, the DRAM price, which was $1.35 at the end of January this year, rose to $7 at the end of last month, more than fivefold.
With the capacities of Samsung Electronics, SK hynix and Micron concentrated on HBM, there are projections that commodity DRAM demand will exceed the three corporations' production. Park Yu-ak, an analyst at Kiwoom Securities, said, "Through next year, the DRAM industry is expected to see conditions where supply cannot keep up with AI-centered front-end demand," adding, "Next year, DRAM demand will expand centered on server DRAM and HBM, with overall demand projected to increase about 18% from this year."
As demand for memory chips concentrates in AI servers, even PC makers such as Dell, HP and Lenovo are suffering from acute DRAM shortages. Jeff Clarke, Dell's chief operating officer (COO), said, "We've never seen expense rise at this pace," adding, "The cost base of all products is increasing." Enrique Lores, HP's chief executive officer (CEO), said, "As we move into next year, memory shortages will worsen," adding, "We are responding by adjusting memory content, among other measures, but product price increases are inevitable."
In response, SK hynix is understood to be considering raising its existing capacity expansion plan. While next year's commodity DRAM capacity expansion was projected to reach up to 70,000 wafers per month, the company is reportedly considering moving up its 2027 capacity expansion plan to raise that to 100,000 wafers per month. Some also suggest the possibility of further expanding production plans by taking additional steps such as reallocating NAND flash production lines.
A semiconductor industry source said, "SK hynix also needs to expand capacity for next-generation DRAM production, such as 10-nanometer-class sixth-generation (1c) DRAM next year," adding, "The company will make maximum use of options it can deploy to respond to demand for HBM and commodity DRAM."