By Hyunjoo Jin and Heejin Kim
SEOUL, July 2 (Reuters) – SK Hynix said on Thursday it planned to invest 100 trillion won ($64.38 billion) to build new NAND memory chip and packaging factories as part of a massive investment programme aimed at addressing a shortage driven by the AI boom.
The projects in the country’s central city of Cheongju outlined on Thursday come under a $2.1 trillion plan unveiled by the chipmaker and its local rival Samsung Electronics on Monday that also included a new chip cluster in the southwest and existing projects.
South Korea is hoping the investments will double the country’s memory chip production capacity within five years.
At an event on Thursday attended by South Korea’s president, SK Hynix CEO Kwak Noh-jung said the company would spend 80 trillion won to build a new factory for NAND memory chip production by 2029 and 20 trillion won for a chip packaging plant by late 2027 in Cheongju.
The plan to invest 100 trillion won in Cheongju was announced on Monday, but details of the investment were not provided at the time.
The huge capacity buildout by the South Korean chipmakers is a major political win for the country’s President Lee Jae Myung, though it is stoking fears of a painful reckoning if AI spending cools.
SK Hynix shares slumped 7.1% and Samsung shares were down 8.6% on Thursday, hit by a global selloff in chipmakers as Meta Platforms’ plan to sell computing power raised questions over excess AI computing capacity.
But at the SK Hynix event, Kwak expressed confidence in the market for NAND, a storage chip that retains data even when a device is turned off, unlike a DRAM chip.
“While demand for NAND has been increasing and is expected to continue growing in the future, NAND supply is constrained,” he said.
SK Hynix said it planned to start construction of the new Cheongju NAND factory, known as M17, next year.
($1 = 1,553.2400 won)
(Reporting by Hyunjoo Jin and Heejin Kim; Editing by Jamie Freed)