Jensen Huang's Handwritten Plea! SK Hynix Invests $720 Billion to Build AI Memory Empire

Global high-bandwidth memory (HBM) leader SK Hynix (SKHY-US) is investing $720 billion to build what it calls the world's largest memory chip production network in South Korea, betting that artificial intelligence (AI) demand will continue long-term. Even though South Korea's mountainous terrain makes large-scale construction highly challenging, the company has decided to massively expand production, reflecting how the AI boom is rewriting supply-demand dynamics and business cycles in the memory industry.

SK Hynix's market capitalization has surged more than fivefold over the past year, now exceeding $1 trillion. According to Counterpoint Research, the company captured 58% of the global HBM market in the first quarter of this year, while Samsung Electronics and Micron (MU-US) each held 21%.

To raise funds for expansion, SK Hynix listed on Nasdaq in July, raising $26.5 billion—the highest fundraising ever for a foreign company listing in the United States. However, its U.S.-listed shares have fallen approximately 21% since reaching a peak near $195 on July 14, closing Wednesday at $154.41, reflecting increased volatility in AI and chip stocks recently.

Yongin Wafer Fab Nearly 50 Stories High

Short-term stock fluctuations have not stopped SK Hynix from pursuing its largest-ever expansion. This investment is also part of South Korean President Lee Jae-myung's industrial plan announced in June, aiming to double South Korea's memory output within five years, with Samsung also building multiple mega-sized wafer fabs.

Last month, CNBC became the first media outlet granted access to film SK Hynix's Yongin semiconductor cluster and tour the cleanroom facilities under expansion in Cheongju. Unlike TSMC (TSM-US) and Intel (INTC-US), whose single-story plants sprawl outward across Arizona, SK Hynix adopts a vertical construction model due to limited land availability in South Korea.

Once completed, the first wafer fab in the Yongin complex is expected to reach the height of a 50-story building, housing six interconnected cleanrooms across multiple floors.

HBM stacks multiple dynamic random-access memory (DRAM) chips vertically, enabling AI processors to access data at high speeds. However, HBM consumes vast quantities of DRAM chips, and combined with AI companies signing procurement contracts far longer than traditional short-term agreements, this has further squeezed memory supplies needed for consumer electronics.

Jensen Huang's Handwritten Appeal Draws Tech Giants to South Korea

SK Group Chairman Choi Tae-won described the current memory scramble as "like a war," where every player wants to secure supply or risk being unable to produce AI computing systems and chips. He admitted memory prices are rising too quickly and hopes large-scale expansion can alleviate supply-demand imbalances.

In July, SK Hynix announced it had signed 10 long-term agreements with major customers. NVIDIA (NVDA-US) secured stable HBM supply after finalizing a $500 billion partnership deal with the SK Group, and both parties will jointly develop next-generation memory.

Choi showed CNBC a wafer inscribed with NVIDIA CEO Jensen Huang's handwritten note: "Please produce more," underscoring the urgent demand for HBM from AI firms. He also revealed he frequently meets with top executives from tech giants including Microsoft (MSFT-US), Google parent Alphabet (GOOGL-US), and Meta (META-US), while Huang and AMD (AMD-US) CEO Lisa Su recently visited South Korea to discuss memory collaboration.

Counterpoint Research reported that hotels near SK Hynix and Samsung's expansion sites are nearly fully booked, as major global tech companies send teams to South Korea to sign supply contracts.

Customized HBM Rewrites Memory Industry Status

SK Hynix operates three memory factories in China, but due to U.S. export controls, it cannot sell its most advanced HBM products there. Meanwhile, Chinese players like ChangXin Storage are accelerating AI memory development, making China an increasingly important competitor to South Korean manufacturers.

The United States is also aggressively expanding capacity. Micron is investing $50 billion to build two memory wafer fabs in Idaho and plans a $100 billion campus in New York. SK Hynix is spending $4 billion to build an advanced packaging plant in Indiana, scheduled for completion in 2028, and is exploring the possibility of establishing front-end wafer fabs in the U.S.

Facing the risk that massive investments could face a market downturn, SK Hynix is pinning its hopes on customized HBM. As next-generation HBM5 is co-designed with AI processors, customers like NVIDIA and Google want proprietary specifications, meaning memory will no longer be a low-margin commodity vulnerable to price cycles.

Choi believes the customization trend is changing the industry status of memory chips. For SK Hynix, this not only helps improve pricing power but will determine whether this $720 billion bet on expansion can remain profitable amid changing AI demand and intensifying competition from China.