Following the 54 trillion won investment in Yongin and Cheongju, to Honam... Expanding AI memory capacity
There is talk of starting construction in Honam in 2028... Micron: “Supply shortage until 2028”
SK Hynix (000660) has advanced the completion date of the Yongin semiconductor cluster by 12 years, but its factory construction plans are actually getting bigger. After confirming an investment of 54.3 trillion won in Yongin and Cheongju, the company is also pursuing a large-scale production base in Honam. In the global memory market, it is predicted that supply shortage will continue until 2028.
SK Group Chairman Chey Tae-won visited the Gwangju Military Airport site on the 9th and mentioned the possibility of simultaneously constructing factories in Yongin and Honam. Chairman Choi said, “We estimate that the demand for semiconductors will continue to grow at a fairly rapid rate,” and “If necessary, there will likely be a situation where we will have to build it in parallel with the Yongin Semiconductor Cluster.”
The Honam production base is planned to be two-thirds the size of Yongin, and further expansion is possible if demand increases in the future. Site preparations are also underway. SK Hynix executives visited the Honam site about 10 times, and the government and local governments are reviewing a plan to prioritize development of 2.08 million m2 out of the 8.2 million m2 planned national industrial complex. A schedule to begin construction in 2028, when the military airport site is scheduled to be delivered, is also discussed.
Investment of 54 trillion won in Yongin and Cheongju confirmed... HBM accelerates factory construction amid boom
SK Hynix plans to build four state-of-the-art semiconductor factories in the Yongin semiconductor cluster. The overall completion target, originally scheduled for 2045, was advanced to 2033. As investment in AI data centers increased and demand for memory semiconductors, including HBM, soared, the existing plan to secure production facilities sequentially over a long period of time was adjusted.
Last August, a total investment of 54.3 trillion won was approved, including 35.2 trillion won in the Y2 plant in Yongin and 19.1 trillion won in the M17 plant in Cheongju. Y2 in Yongin aims to operate its first clean room in June 2029, and M17 in Cheongju aims to operate its first clean room in December 2028. In both factories, there are still steps to bring in equipment, test operations, and stabilize yields before actual mass production.
The expansion of HBM production is having an impact on memory companies rushing to build factories. HBM has a more complex manufacturing process than regular DRAM and consumes more wafers and facility resources required for production. As HBM production increases, the production capacity that can be allocated to general DRAM may decrease. Recently, demand for HBM for AI servers as well as DRAM for general servers is increasing.
In its recent earnings announcement, Micron of the United States also predicted that supply constraints in the DRAM and NAND flash markets will continue in 2027 and 2028. Even in a situation where DRAM bit shipments are increasing at an annual rate of around 20%, the supply shortage is not expected to be easily resolved.
Micron CEO Sanjay Mehrotra said, “We expect demand to exceed supply in 2027 and 2028, and supply and demand will be tighter than this year.”
Even if new factories are built in Yongin and Cheongju, it will take several years for actual production capacity to expand. By securing an additional production base in Honam, new production facilities can be operated in stages even before the entire Yongin cluster is completed.
Construction to begin in 2028... Military airport relocation and power security must be surpassed
The Honam Semiconductor Cluster is scheduled to be established in the Gwangju Military Airport area. The long-term investment plan announced by the government in June included a plan for SK Hynix and Samsung Electronics to build a total of four semiconductor factories, two each.
Regarding the size of the Honam production base, Chairman Choi said, “So far, we are planning to make it about two-thirds the size of Yongin,” leaving open the possibility of expanding the scale if demand increases further. In order to expedite factory construction, we are also considering starting some construction first before the infrastructure is completed.
Chairman Choi said, “Even if the water and power supplies are delayed, I think I will go in first if I can get the timing right quickly.”
The Honam production base must go through procedures such as relocating the military airport, creating land, and building power and water supply facilities. The government and Jeonnam Gwangju City have proposed a goal of first mass production in June 2030, but SK Hynix's specific construction start time and investment schedule for each plant have not yet been confirmed.
The burden of large-scale expansion is also considerable. Previously, Reuters analyzed the production facility expansion plans of Samsung Electronics and SK Hynix and pointed out that if the growth of AI investment slows, the risk of oversupply may increase. The memory industry has a history of experiencing price declines as facility investment concentrated during the boom led to increased production several years later.
SK Hynix is accelerating the completion of the Yongin cluster by 12 years and considering the Honam production base as an expansion of investment targeting memory demand in the 2030s. In a situation where 54.3 trillion won has already been decided to be invested in Yongin and Cheongju, the investment burden will also increase if the Honam plant is also realized. The performance of this expansion may vary depending on how long AI memory demand will continue in the future.
