Kwak Noh-Jung, CEO of SK Hynix, the global leader in high bandwidth memory (HBM), said AI customer demand remains strong and the memory shortage could persist all the way through the end of 2030. He emphasized that HBM has shifted from a standardized commodity to a customized product, meaning that even when a cyclical downturn arrives, demand will only taper gradually rather than repeating the sudden freezes seen in past memory cycles.

Kwak noted that AI is changing the rules of the game in the memory industry. In the past, memory was highly standardized, and manufacturers raced to expand capacity during boom times, which could quickly flip shortages into oversupply. But in the AI era, HBM must be customized to customer requirements, bringing suppliers and end customers into closer collaboration and making future demand easier to anticipate. He expects that even when the next downturn arrives, demand will remain at a plateau rather than freezing abruptly as in previous cycles.

Market data supports this optimistic view. According to Counterpoint Research, SK Hynix captured 58% of the global HBM market by revenue in the first quarter of this year, with Samsung Electronics and Micron each holding 21%. Nvidia, SK Hynix’s largest customer, released guidance on Wednesday projecting revenue growth of roughly 70% in the next fiscal year, signaling that AI computing demand has yet to cool meaningfully.

Simultaneous Expansion in U.S. and South Korea; Advanced Packaging to Supply Nvidia and Other Customers

SK Hynix is accelerating its global footprint. The company held a groundbreaking ceremony Thursday in West Lafayette, Indiana, for its first U.S. HBM advanced packaging facility, with the investment raised from the original $3.9 billion to more than $4 billion (approximately NT$130 billion). The new plant is expected to bring its cleanroom online in the second half of 2028 and begin mass production of next-generation HBM4E in the third quarter of 2029, with eventual annual capacity reaching hundreds of thousands of wafers. Advanced wafers produced in South Korea will be shipped to Indiana for packaging and testing, then supplied to U.S. customers including Nvidia, Microsoft, and Google.

The U.S. government has approved approximately $458 million in grants (about NT$14 billion) and up to $500 million in loans (about NT$16 billion) under the CHIPS Act. The facility and related supply chain investments are estimated to create roughly 7,000 direct and indirect jobs locally. Kwak said that as long as conditions such as power, water, and talent are in place, the company does not rule out additional investment in the U.S.

Expansion in South Korea is also moving forward in parallel. The company this month approved an investment plan of approximately ₩54.3 trillion (about NT$1.2 trillion), of which ₩35.2 trillion (about NT$810 billion) will go toward the second phase of fab construction, with related investment continuing through 2031.

Deepening Japan Presence; NAND Collaboration Still Under Review

SK Hynix is also preparing to deepen its footprint in Japan. Market sources indicate the company is studying joint development of NAND technology with Japanese customers and suppliers. Kioxia’s shareholder structure has recently shifted, with the investment vehicle through which SK Hynix holds its stake becoming Kioxia’s largest shareholder at 14.19%. Kwak said there are currently no further specific plans for this investment.

Bank of America Backs the Stock: Shareholder Returns Targeting ₩100 Trillion

Bank of America maintained its Buy rating on SK Hynix with a target price of $250. The analyst team noted that the so-called “content reduction” phenomenon—where memory content per device declines—is currently concentrated in PCs, smartphones, and low-end GPU/ASIC segments, reflecting memory supply shortages rather than weakening end demand.

On the business model front, as long-term agreements (LTAs) continue to grow, memory average selling prices (ASP) are expected to stabilize, no longer exhibiting the wild swings of the past. On shareholder returns, SK Hynix reiterated its policy of returning more than 50% of free cash flow to shareholders, including the recently announced ₩40 trillion share buyback program. Bank of America expects that in addition to the buyback, the company will pay approximately ₩30 trillion in dividends based on 2026 results.

The Bank of America team said remaining distributable free cash flow could be paid out after the March 2027 annual general meeting, in April 2027, through a combination of dividends and buybacks. With the memory supercycle driving both ASP and volumes higher, SK Hynix’s 2027 free cash flow could exceed ₩200 trillion, supporting total shareholder returns of more than ₩100 trillion in 2027.

Nvidia’s strong revenue guidance lifted chip stocks, with SK Hynix ADRs rising 5% in after-hours trading to $165.92. Earlier reports indicated that Samsung Electronics and SK Hynix plan to increase supply of 8-layer HBM4 memory to Nvidia in the second half of this year.

Equipment Side Also Scaling Up: Tokyo Electron Expands R&D Near Samsung

Semiconductor equipment maker Tokyo Electron (TEL) is also expanding in South Korea. Its R&D center “TEL Technology Center Korea-2 (TTCK-2)” in Hwaseong, Gyeonggi Province, was completed in October 2024, marking TEL’s third R&D site in South Korea, with a focus on providing customized support in close proximity to Samsung Electronics.

TTCK-2’s defining feature is “customer-responsive” R&D. Once a customer’s evaluation wafers are delivered, process evaluation can be completed within as little as 24 hours—dramatically reducing turnaround time compared with sending wafers back to TEL’s headquarters research facilities in Japan. Customer engineers can also visit TTCK-2 directly and work alongside TEL engineers through the entire workflow, from evaluation planning and process execution to results analysis.

The center supports customers’ advanced DRAM, NAND flash memory, and foundry processes. In addition, TEL Korea engineers are currently developing a next-generation plasma etching tool that uses approximately 75% Korean-made components, with the underlying technology based on patents filed by key TEL Korea executives.