NEW FACTORIES: The Yongin Y2 is to be the second of four fabs planned in a cluster, while the Cheongju M17 expansion is to break ground in February next year

SK Hynix Inc plans a 54 trillion won (US$38 billion) expansion of its chipmaking facilities in South Korea, the memorychip maker said in a statement yesterday.

The company is to build a new DRAM manufacturing facility in Yongin and a NAND fabrication plant in Cheongju, with roughly two-thirds of the budget going to the first of them.

The move, covering dynamic memory for the lowest latency and solid-state storage for fast access to greater quantities of data, is in response to “the continuously growing demand for memory in the [artificial intelligence] AI era,” SK Hynix said in the statement.

The new Yongin Y2 is to be the second of four fabs planned at the Yongin semiconductor cluster, it said.

The company intends to break ground on the project in July next year, targeting June 2029 for opening the first cleanroom en route to producing high-bandwidth memory and other next-generation DRAM.

The Cheongju M17 expansion is to break ground in February next year and its first cleanroom is targeted for the end of 2028.

The investment period runs through April 2031.

A linchpin of the AI infrastructure boom and key partner to Nvidia Corp, SK Hynix has helped drive South Korea’s KOSPI higher, but in recent times it has also turned into a source of massive volatility as sentiment around AI shifts from enthusiasm to doubt.

While the company’s production capacity is sold out through next year and it is increasingly securing long-term deals with customers, questions persist about its ability to sustain the enviable profit margins of today over the long run.

SK Hynix, along with Samsung Electronics Co, has made a large commitment to invest further in building South Korea’s domestic manufacturing and AI capabilities.

The country aims to double its memory production capacity within five years and secure world-class manufacturing capabilities to pull far ahead of competing nations, the South Korean Ministry of Trade, Industry and Resources said in announcing a broad plan at the end of June.

Seoul-traded shares in SK Hynix closed down 4.9 percent yesterday, but trimmed losses to 2.1 percent in post-market trading on Nextrade as of 4:45pm.

The moves come after a separate filing that the company would detail shareholder return plans in the third quarter.

“The company is actively reviewing additional shareholder return initiatives as part of its ongoing commitment to enhancing shareholder value,” it said.