SK hynix Chief Sees Memory Shortage Lasting Through 2030

WEST LAFAYETTE — SK hynix (000660) CEO Kwak Noh-jung dismissed the notion that memory demand has peaked, forecasting that the shortage driving the artificial intelligence industry will persist for another four years. On plans for a U.S. initial public offering of Solidigm, the company's American subsidiary, the CEO said discussions are still under way.

Kwak made the remarks at a press briefing on the 27th in West Lafayette, Indiana, held after the groundbreaking ceremony for SK hynix's advanced packaging plant there.

Asked about the possibility of oversupply and a downturn in the semiconductor industry, Kwak said no one can know how long the shortage will last, but added that with no clear signs of a downturn, he expects the current conditions to continue through the end of 2030. "Of course, a downturn may come at some point," he said, "but the next downturn will look different from what we have seen over the past several decades. In the past, the memory business was effectively a 100% commodity product. Companies raised output and competed in the same market, and because demand could not be forecast precisely, it was difficult to adjust production to the right level."

Citing high-bandwidth memory (HBM), which is customized to match AI processor chips such as graphics processing units (GPUs), Kwak said the industry is shifting away from commodity products. "In the AI era, commodity products are moving toward partially or fully customized products," he said. "We have to develop next-generation memory together with customers and optimize system performance, and in that process we can forecast market demand far more accurately." He added: "That is why, even if a downturn comes, it will not be a sharp drop but something closer to a gradual decline or a flat trend. After 2030, I expect supply and demand to reach balance and the entire AI industry to grow together."

Asked whether the Solidigm listing had been withdrawn, Kwak said the IPO remains at the discussion stage. "We have not decided to withdraw it," he said. "We need a little more time before we can give an answer." Solidigm is a subsidiary SK hynix established in the United States in 2021 after acquiring Intel's NAND flash business. In January, SK hynix converted Solidigm into an "AI company" and is pursuing a restructuring that transfers the NAND flash business to a newly created subsidiary under it, also named Solidigm. The move has been read as groundwork for a Nasdaq listing.

SK hynix says it is open to any location for investment beyond the Indiana fab. Asked whether the company had drawn up a shortlist of project candidates, Kwak said there is no such list. "As the chairman explained earlier, we are open to anywhere that can provide sufficient resources such as water, power, talent and subsidies," he said, referring to SK Group Chairman Chey Tae-won. "We are open to any region or any country that offers new business opportunities to pursue with our customers," he added. "If the conditions are met, we would like to deliver more good news to the AI industry in the United States or another country, as we did at today's event."

Asked whether SK hynix would maintain its stake in Japanese memory maker Kioxia, Kwak said there is no specific or confirmed plan yet regarding the holding. "That said, just as we contribute to the AI industry in the United States, we want to contribute to Japan's semiconductor industry as well," he said. "Since we are investing in Japan as we are in the United States, I believe that contributing to the local community and the country is in some ways our responsibility. There is no confirmed plan, but we are carefully examining how we can grow the market together."