SK hynix Weighs Japan Joint Venture as AI Memory Shortage Looms

As forecasts point to a prolonged memory supply shortage driven by the spread of AI, SK hynix is moving to expand its production capacity. Bloomberg reported on the 31st that, amid this trend, SK hynix is reviewing additional production bases.

SK hynix has already decided to invest in new domestic production facilities worth KRW 54 trillion, and it has also begun construction of a HBM packaging plant in the U.S. In addition, the company is reviewing plans to make memory semiconductors with local partners in Japan.

Bloomberg reported that SK Group Chairman Chey Tae-won said at a Korea-Japan Chamber of Commerce and Industry meeting in Sendai, Japan, that the company is examining the feasibility of operating a joint memory semiconductor plant in Japan. If investment in Japan materializes, the supply chain could expand to include an additional memory production base in Japan, alongside domestic front-end production and U.S. HBM back-end processing.

However, no decision has yet been made on what products would be made at a plant in Japan. The joint venture partner, investment size, and location are all still undecided.

SK hynix is reviewing investment in Japan related to D-RAM and NAND flash production. The investment in Japan is described as one of several options, aimed at securing production capacity to meet surging AI demand while also managing production costs.

Chey said he was looking at several regions in Japan, and that the plan was not limited to any specific area. The main conditions for choosing a site were said to include whether infrastructure such as electricity and water needed to run the plant could be secured.

Nikkei and others reported that Miyagi Prefecture is being mentioned as one of the candidate sites. Miyagi Prefecture has proposed a site of about 300,000 square meters to attract SK hynix and is known to have prepared water and power infrastructure for a semiconductor plant.

SK hynix said it is reviewing ways to strengthen its memory business competitiveness, including by adding a production base in Japan. The company said the review also includes building additional production bases, but that nothing has been finalized so far.

The sharp rise in memory demand driven by the spread of AI is cited as the background for SK hynix's review of overseas production bases. Demand for HBM is expanding as AI data centers are added, demand for server D-RAM is also growing, and demand for NAND for enterprise solid-state drives (eSSD) is rising as well. As a result, securing memory production capacity is directly tied to competitiveness.

Kwak Noh-jung, CEO of SK hynix, said the global memory supply shortage is expected to continue until 2030. He said that because of the nature of the semiconductor industry, it is difficult to secure new production capacity in a short period of time, and that even if investment in production facilities is expanded now, it will take several years before supply actually increases.

Because of this situation, SK hynix decided this month to make an additional investment of KRW 54 trillion in domestic production facilities. The company held a board meeting on the 7th and decided to invest KRW 35.2 trillion in Y2, the second production facility at the Yongin semiconductor cluster, and KRW 19.1 trillion in M17 in Cheongju, for a total investment of KRW 54.3 trillion.

SK hynix has set the target date for opening the clean room at Y2 for June 2029, and the target date for opening the clean room at M17 for December 2028. At the Y2 and M17 production facilities, the company plans to expand D-RAM and NAND production capacity to match customer demand.

Accordingly, SK hynix is moving to significantly expand domestic production capacity. At the same time, it is also reviewing overseas bases.

The rationale for reviewing overseas bases is to prepare for the possibility that the pace of growth in AI memory demand could outstrip the pace at which existing production systems are expanded. Omdia forecasts that from last year to 2030, D-RAM demand will grow at an average annual rate of 19%, and NAND demand will also grow at an average annual rate of 19% over the same period.

SK hynix's expansion of production bases is already under way in the U.S. On the 27th, local time, the company held a groundbreaking ceremony for an advanced AI memory packaging production facility in West Lafayette, Indiana, and it plans to invest more than USD 4 billion to build a base with next-generation HBM production and advanced packaging research and development (R&D) functions.

The company plans to begin mass production of next-generation HBM there in the second half of 2029, and is moving toward assigning packaging and testing of next-generation HBM to the U.S. base. To that end, it has set a strategy to ship advanced wafers produced in Korea to the U.S. for packaging and testing locally, with the aim of narrowing the distance to U.S. AI customers. The Indiana facility will serve as a back-end base handling advanced HBM packaging.

Separately, the company is reviewing a production base in Japan, and this is different in nature from its investment in the U.S. The facility under consideration in Japan would be a joint factory to produce memory chips such as D-RAM and NAND, and would be a front-end facility that makes the chips themselves rather than a back-end base. If the investment in Japan materializes, it would mean SK hynix's overseas production network expands from back-end to front-end.

Japan has emerged as a candidate site because of its local semiconductor ecosystem. Japan has a concentration of semiconductor equipment and materials companies, including Tokyo Electron (TEL). Japan is also building a NAND production base centered on Kioxia.

SK hynix has an equity relationship with Japanese NAND maker Kioxia through a Bain Capital consortium, and CEO Kwak recently said the company is reviewing ways to jointly develop the NAND market with customers and suppliers. However, at this stage, it is difficult to directly link the review of a joint plant in Japan with Kioxia.

SK hynix and Chey have not disclosed a specific joint venture partner, and the type of memory to be produced has also not yet been decided. Accordingly, further review is needed before the plan for a production facility in Japan can become reality.

Several variables remain for any possible realization of a production facility in Japan. There are domestic regulations and government approval issues related to the overseas transfer of advanced semiconductor technologies, and there are also issues related to securing the power and water needed for a large-scale semiconductor plant. In addition, the level of support from the Japanese central government and local governments could affect whether the investment actually proceeds.

Against this backdrop, SK hynix is pushing to expand its domestic D-RAM and NAND production capacity, while building an HBM packaging base in the U.S. and also reviewing an additional production base in Japan. In the AI era, SK hynix's production strategy is presented as shifting from a Korea-centered model to one centered on a global supply chain.

As investment in AI infrastructure continues, the core challenge for memory manufacturers is no longer just the advanced development of next-generation HBM; rapidly securing production capacity to turn surging demand into actual product supply has emerged as a competitiveness factor. In this context, SK hynix's review of a joint plant in Japan carries meaning as an extension of the competition to secure AI memory supply capacity.

Source: IT DAILY · Lee Jae-young
Original: https://www.itdaily.kr/news/articleView.html?idxno=241316

References

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