SK Hynix plans to invest $51 billion in a new NAND factory to capitalize on the demand for AI memory.

      SK Hynix plans to invest 80 trillion won, approximately $51.46 billion, to construct a new NAND flash memory factory in Cheongju, South Korea, with production expected to commence in the first half of 2029. CEO Kwak Noh-jung revealed the initiative at an event attended by President Lee Jae Myung, incorporating the new facility, named M17, into South Korea’s broader effort to meet industry demand that is currently difficult to fulfill.

      This announcement comes shortly after Samsung disclosed its own domestic investment plan of $647 billion for the same area facing chip shortages. The $51.46 billion figure pertains solely to the NAND factory. When an advanced packaging plant is included, SK Hynix's total spending commitment increases to 100 trillion won, or about $64 billion.

      The second facility, called P&T7, which will also be located in Cheongju, aims for wafer-level packaging and is scheduled for completion by 2027, two years before the main factory. Reports from Reuters and Korean media have confirmed the budget allocation for the two projects.

      M17 will be SK Hynix’s fourth NAND factory and signifies a strategic move that signifies confidence in the continued need for robust new capacity in flash storage, despite it being historically overshadowed by high-bandwidth memory (HBM) chips used in AI accelerators. NAND chips are essential for long-term data storage in solid-state drives, distinguishing them from DRAM and HBM utilized as working memory in AI servers.

      Industry analysts like TrendForce and DigiTimes have noted a tightening supply of NAND as data center operators purchase more storage in tandem with computational needs, even though much of the recent attention surrounding SK Hynix's stock surge has focused on HBM.

      On June 29, President Lee’s administration announced an investment plan estimated between $520 billion and $576 billion, depending on different sources, with both Samsung and SK Hynix pledging to build new fabs and packaging lines in the Chungcheong region. Reports from Reuters and Nikkei Asia suggest that this wave of spending is a response to predictions that the global memory shortage, primarily driven by the expansion of AI data centers, may continue until 2027 rather than easing within this year.

      This shortage has impacted consumer electronics as well. Memory prices have escalated considerably this year, compelling Apple to discontinue its entry-level Mac Mini, while DRAM buyers are exploring alternative suppliers, including a reported move by Corsair towards Chinese-made DRAM for some of its products.

      The extensive responses from SK Hynix and Samsung indicate both companies anticipate the supply crunch will extend well beyond the upcoming product cycle. Construction on M17 is set to start next year, providing SK Hynix approximately three years to bring the factory from groundbreaking to production, which is typical for a facility of this magnitude. Neither SK Hynix nor the South Korean government has specified how the investment will be financed beyond the company’s capital initiatives.

      Cheongju, already the site of SK Hynix’s existing NAND operations, is becoming the focal point for the company’s storage ambitions well into the next decade. Last year, SK Hynix surpassed Samsung to become South Korea’s most valued publicly traded company, a change mainly attributed to the HBM surge and highlighting the significance of this new investment in flash storage.

      While NAND capacity expansions may not receive as much media attention as HBM supply agreements, both product lines are increasingly vying for the same wafer starts and packaging capacity within SK Hynix’s Korean facilities. Executives from both companies have openly acknowledged that memory constraints are hindering the overall pace of growth in the AI sector.

      The South Korean government has positioned the combined investments as a national strategy, recognizing the country’s memory industry dominance as a valuable asset to protect through direct policy initiatives. However, details on whether this will involve tax incentives or expedited permitting for the Chungcheong region's fabs have not yet been publicly discussed. For now, SK Hynix has made a concrete commitment to two plants, one region, and a 2029 deadline.