SK Hynix has dismissed concerns about a slowdown in artificial intelligence (AI) investment, stating that demand for high-bandwidth memory (HBM) and general DRAM and NAND has entered a structural growth phase. The company anticipates that the AI memory supercycle will last longer than previously expected.
During a conference call on its second-quarter earnings held on July 29, SK Hynix noted, "AI infrastructure investment remains robust, and major customers are requesting even more memory supply." The company added that a structural change is occurring, with growth in both AI memory and general memory.
The company expects DRAM demand to grow in the mid-20% range and NAND demand to increase in the high-10% range this year. Given the complexity of advanced processes and the time required to build production facilities, SK Hynix predicts that supply shortages will persist for a considerable period.
Long-term supply contracts are also expanding. SK Hynix announced that it has completed negotiations for long-term agreements (LTA) with about ten companies, including key customers. These contracts typically span five years and include not only simple volume supply but also customer purchase commitments and deposits.
SK Hynix emphasized that its current capacity expansion is based on demand secured through long-term partnerships with customers. The company stated, "Investment and production expansion will be carried out gradually, considering customer demand and investment efficiency, so the possibility of oversupply is limited."
The company reaffirmed its confidence in its HBM competitiveness, stating that it began mass production of HBM4 in the second quarter and plans to significantly increase production in the second half of the year. Samples of the next-generation product, HBM4E, have already been supplied to major customers, with mass production targeted for 2027.
SK Hynix noted, "Our HBM competitiveness encompasses not only performance but also yield, quality, and stable mass production capabilities." The company has already achieved mass production stability similar to that of the previous generation product (HBM3E) and is proactively developing iHBM technology to address heat issues in the next-generation product.
Regarding recent technological advancements by competitors, SK Hynix stated, "The competitiveness accumulated in terms of market launch timing, product performance, mass production yield, quality, and customer trust is not easily replicated in a short period." The company emphasized that its early joint development experiences and long-term collaboration with customers will help maintain its leadership in the HBM market.
The company will continue its aggressive investments tailored to the AI era. It plans to accelerate the mass production schedule for M15X and quickly expand production capacity following the operation of its Yongin Fab 1 in early 2027.
This year, capital expenditures (CAPEX) are expected to reach the upper 40 trillion won range. This includes the recently announced advanced packaging plant in Cheongju (P&T7) and a new NAND production facility (M17), as well as the establishment of a new semiconductor cluster in Yongin to secure a foundation for long-term growth.
Regarding its recent listing on the Nasdaq American Depositary Receipts (ADR), the company stated, "This is not just a simple fundraising effort but a recognition of our technology and growth potential in the global market." It aims to leverage this opportunity to explore new business avenues.
With net cash increasing to 69 trillion won, SK Hynix has also announced plans for additional shareholder return policies. The company stated, "We are balancing growth investments in the AI era with financial soundness and shareholder returns as our capital allocation principle," and it plans to share additional shareholder return measures with the market once the ADR-related regulatory procedures are completed.
* This article has been translated by AI.
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