SK Hynix plans to invest $51 billion in a new NAND factory to capitalize on the growing 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 set to start 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 a broader effort by South Korea’s two memory giants to meet the industry's growing demand.

      This announcement follows Samsung's own domestic investment plan of $647 billion, disclosed just days earlier for the same chip-deficient region. The $51.46 billion figure pertains solely to the NAND factory. Once the additional advanced packaging facility is counted, SK Hynix's overall investment rises to 100 trillion won, or about $64 billion.

      The second facility, referred to as P&T7 and also located in Cheongju, will focus on wafer-level packaging and is expected to be completed by 2027, two years ahead of the main fab. Reuters reported both investment amounts, supported by Korean media confirming the division of the two projects.

      M17 will be SK Hynix’s fourth NAND factory, demonstrating a strategic move that flash storage, often overshadowed by high-bandwidth memory (HBM) chips that power AI accelerators, still requires significant new capacity. NAND chips are responsible for long-term data storage in solid-state drives, unlike DRAM and HBM, which serve as working memory for AI servers.

      Industry analysts, including TrendForce and DigiTimes, have indicated tightening NAND supply as datacentre operators increasingly purchase storage alongside compute resources, even as the recent rally in SK Hynix’s stock has focused mainly on HBM.

      President Lee’s administration announced an investment plan ranging from $520 billion to $576 billion on June 29, with both Samsung and SK Hynix pledging to establish new fabs and packaging facilities throughout the Chungcheong region. Reuters and Nikkei Asia have associated this surge in spending with concerns that the global memory shortage, particularly influenced by AI datacentre expansions, may continue into 2027 instead of alleviating this year.

      This shortage has already impacted consumer electronics, causing memory prices to rise sharply this year, leading Apple to discontinue its entry-level Mac Mini. Additionally, DRAM buyers have shifted to alternative suppliers, with reports indicating Corsair's movement toward Chinese-manufactured DRAM in certain product lines.

      The magnitude of the response from SK Hynix and Samsung indicates that both anticipate the supply crunch to persist beyond the next product cycle. Construction of M17 is projected to commence next year, allowing SK Hynix around three years to develop the fab from the groundbreaking stage to production, which is typical for facilities of this size. Neither SK Hynix nor the South Korean government has provided specifics on how the investment will be financed beyond the company's own capital plans.

      Cheongju, already accommodating SK Hynix’s current NAND operations, is evolving into the focal point for the company's storage ambitions well into the next decade. Last year, SK Hynix surpassed Samsung as South Korea’s most valuable publicly traded company, a change primarily driven by the HBM boom rather than NAND, making this new investment in flash storage significant.

      NAND capacity expansions usually attract less attention than HBM supply deals, yet both product lines increasingly vie for the same wafer starts and packaging resources within SK Hynix’s Korean facilities. Executives from both firms have openly acknowledged that memory has become a limiting factor affecting the rapid growth of the broader AI industry.

      The South Korean government has framed this combined investment as part of a national strategy, viewing the country's memory leadership as a valuable asset to protect with direct policy support. However, specifics on whether this will involve tax incentives or expedited permitting for the Chungcheong region’s fabs have not been disclosed.

      Currently, the clear commitment is from SK Hynix: two plants, one region, and a deadline of 2029.