SK Hynix to invest $13 billion in new plant amid memory chip shortage

South Korea-based memory maker SK Hynix announced Tuesday it will invest 19 trillion Korean won ($12.9 billion) to build a new advanced packaging plant, as it expands production to meet rising demands tied to artificial intelligence. 

The new facility will be located in the Korean city of Cheongju, building on the company’s existing footprint there. Construction is set to begin in April, with completion targeted for the end of 2027, the firm said in a statement.

The plant will focus on advanced packaging, which involves combining multiple memory chips into a single, high-density unit to improve performance and energy efficiency while reducing overall size.

SK Hynix is among the world’s largest producers of memory chips and leads in so-called high-bandwidth memory (HBM), which is used in artificial intelligence processors, including those designed by U.S. chipmaker Nvidia. 

The investment comes as SK Hynix seeks to meet growing demand for HBM as global AI competition intensifies, a trend that has pushed up prices and made it lucrative for memory giants.

SK Hynix rival Samsung Electronics has also announced plans to ramp up HBM production in recent months.

According to industry projections cited by SK Hynix, the HBM market is expected to expand at a compound annual growth rate of 33% between 2025 and 2030.

However, as producers shift to meet this AI-oriented demand, it has also led to shortages in conventional memory, raising concerns about price hikes across the broader electronics industry.

SK Hynix shares are up about 12% year-to-date, but were down 2.5% in Tuesday trading.