SK Hynix considers opening factories in the US to mitigate the high prices of memory chips
SK Hynix is considering building a chip factory in the United States to increase the supply of memory and try to mitigate the current crisis of rising prices due to high demand. The announcement was made by the president of the SK group, Chey Tae-wonduring the Summer Forum of the Korean Chamber of Commerce and Industry held in Jeju on July 15.
Chey has described current memory prices as “abnormally high” and has warned that if the situation continues, the market will eventually shrink and new competitors will inevitably emerge. He has cited the interest shown by the controversial Elon Musk in the production of semiconductors as an example of the current profitability of the sector.
The manager explained that, while AI companies can absorb the increase in prices through investments, PC and smartphone manufacturers They have no choice but to transfer the rise in semiconductors to the final price of the product. As the majority of customers of these devices are individuals, there is a limit to which the price can be increased. To prevent “chipflation” (inflation caused by the rise in chip prices) from driving up the costs of finished products, supply must increase.
SK Hynix seeks location for a factory in the United States
SK Hynix is exploring building factories not only in South Korea, but also in the United States. The president has mentioned that he is receiving “requests from all sides, including pressures and lobbies”and that the South Korean government will likely begin to face similar pressures.
Chey has stated that they are looking for locations to build factories and they must evaluate which is the best, fastest and largest site worldwide to prioritize it. The decision also responds to trade tensions with the United States and China.
AI demand may grow by 50-60% next year
Despite advocating increasing supply, Chey has predicted that semiconductor prices they will not go down easily in the short term. Demand for AI chips could skyrocket between 60% and 100% next yearbut the main suppliers will barely increase their production. With AI-related demand already accounting for more than half of the total semiconductor market, global demand could grow by at least 50-60%.
Chey has also warned that, if prices continue to skyrocket and “chipflation” consolidates, it will generate geopolitical problems.
Although this attempt to reduce the price of chips by installing new factories sounds good, the truth is that the construction and implementation of such facilities will take years, so Current prices will not be influenced in the short and medium term.
On the other hand, although the president of the company has indicated that “even if profit margins are reduced, increasing supply, protecting the market and growing together is essential for the sustainability and development of the industry”. We must not forget that SK Hynix is one of three companies reported for agreeing to artificially inflate the price of memory in this crisis.
