SK Hynix commits 40 trillion won (~$30 billion) capex to expand HBM and DRAM production, addressing AI data center memory supply constraints
SK hynix announced on the 29th that it will substantially increase its capital expenditure this year to the high 40 trillion won range, driven by surging demand for artificial intelligence semiconductors and a strategic push to strengthen its market leadership. The company directly addressed recent concerns about an AI bubble and potential pullbacks in infrastructure investment, positioning itself to accelerate second-half earnings growth through its next-generation high bandwidth memory (HBM) technology.
According to filings on July 29th, SK hynix reported second-quarter sales of 79.3 trillion won and operating profit of 60.5 trillion won, representing increases of 256.8% and 557.2% respectively from the prior year.
At its second-quarter earnings call, SK hynix stated that total investment for the year is expected to reach the high 40 trillion won range—more than 10 trillion won above last year's 30.2 trillion won—driven by accelerated production schedules and expanded capital deployment.
The company emphasized that in a market characterized by persistent supply-demand imbalances, the ability to reliably deliver required volumes on schedule has become a critical competitive advantage beyond technological prowess alone.
To capitalize on this, SK hynix is accelerating the mass production ramp of its Cheongju M15X facility and making preemptive investments to enable rapid capacity expansion once the cleanroom at its first fab in the Yongin Semiconductor Cluster opens in early 2027. The company is also advancing medium- and long-term projects—including the P&T7 advanced packaging facility, M17 NAND production base, and a new semiconductor cluster—while carefully balancing customer demand against investment efficiency.
Addressing market speculation about reduced AI infrastructure spending, a company official stated: "The current market situation is not one of cutting investment, but rather a legitimate phase of maximizing utilization of the large-scale AI infrastructure already deployed and beginning to monetize it in earnest." The official added that for major cloud service providers, AI investment remains inseparable from competitive positioning in search, advertising, cloud, and software services. "While timing of individual projects may shift due to constraints like power and data center capacity, intensifying competition among CSPs will sustain solid AI infrastructure investment beyond next year."
On its core growth driver, SK hynix reported that HBM4—its sixth-generation high bandwidth memory product—has begun mass production shipments to major customers, with production capacity ramping steadily. "In terms of mass-production yield and quality, performance is already approaching the mature HBM3E generation," the company said.
Sample shipments of HBM4E, the next-generation variant, have been completed to major customers with development progressing on schedule toward full-scale mass production next year. While specific pricing for next year remains confidential under NDA, SK hynix noted that volume and price discussions are advancing smoothly given solid customer demand.
The company projected a meaningful earnings recovery in the second half. "Rather than reacting to short-term price movements or quarterly profitability swings, we have structured our sales strategy to secure stable demand visibility and deepen long-term customer partnerships," the company explained. "The shift of certain high value-added product shipments to the second half impacted blended average selling prices in the quarter."
In the second half, HBM4 supply volumes will expand significantly and 1C nanometer-class DRAM shipments will increase substantially, driving higher bit growth than the first half. "Combined with average selling price improvement from a greater proportion of high value-added products, second-half earnings improvement will accelerate considerably," SK hynix concluded.