After the stock price skyrocketed fourfold, SK Hynix promises to continue expanding AI chip production capacity

As the stock price has surged more than fourfold over the past year, reaching record profits, SK Hynix’s parent company SK Group Chairman Chey Tae-won has pledged to expand AI memory chip capacity to meet the surge in demand driven by the global data center construction boom.

This second-largest South Korean conglomerate leader called high-bandwidth memory (HBM) a “monster chip” at a Washington conference on February 20, stating that the product is generating huge profits for SK Hynix. The chip manufacturer has led the global semiconductor industry with its stock performance, fueled by explosive growth in AI chip demand.

In January, SK Hynix announced that its capital expenditure in 2026 would significantly increase compared to last year to meet the demand for HBM chips required by AI accelerators designed by companies like Nvidia. The company’s storage chip capacity for the entire 2026 year has already been fully booked.

This capacity expansion plan highlights how the global AI race is reshaping the semiconductor supply landscape. From Microsoft to Meta, US tech giants are expected to invest about $650 billion this year in building AI infrastructure, and this record-breaking spending is causing a worldwide shortage of storage chips.

Market dominance further solidified

Currently, the global storage chip market is led by SK Hynix, its South Korean peer Samsung Electronics, and US Micron Technology. In the AI-critical HBM component sector, SK Hynix has established a leading advantage. The company’s 2026 capacity has been fully booked, and Micron’s HBM products are experiencing a similar situation.

US tech companies are engaged in a large-scale infrastructure race to gain an edge in AI development. From Microsoft and Meta to other tech giants, an estimated total investment of about $650 billion this year is aimed at AI-related infrastructure. This unprecedented scale of investment is directly driving demand for high-performance storage chips.

The HBM chips produced by SK Hynix are core components for AI accelerators from Nvidia, AMD, and others, used for training and running AI services. As AI model sizes continue to grow, demand for such high-performance storage chips is exploding.

Profit expectations soar but risks remain

Analysts are continuously raising their profit forecasts for SK Hynix. According to Chey Tae-won, analysts’ average forecast for the company’s operating profit in 2026 has risen from about $50 billion at the end of last year to $70 billion in January this year, with some institutions even raising expectations to over $100 billion.

However, Chey Tae-won also issued a warning. “This sounds like good news,” he said, “but it could also turn into a $100 billion loss.” The chairman cautioned that rapid technological iteration could drastically change the competitive landscape, and losses remain a possibility in the future.

This cautious stance reflects the cyclical nature of the semiconductor industry and the uncertainties brought by technological change. Despite strong current demand, industry history shows that supply-demand imbalances and technological shifts can quickly alter market dynamics.

Energy infrastructure becomes a new bottleneck

Chey Tae-won also pointed out the increasingly severe infrastructure challenges. He stated that SK Group is exploring building power plants near AI data centers because the inability to meet energy demands could lead to “catastrophic” consequences.

This statement highlights new constraints facing the AI chip industry. As AI models and data center scales expand, power supply is becoming a critical bottleneck after chip capacity. For chip manufacturers planning large-scale expansion, ensuring stable energy supply has become a strategic priority.

Although Chey Tae-won did not specify the scale of SK Hynix’s capacity expansion, the company has clearly stated it will significantly increase capital expenditure. This commitment indicates that despite technological and market risks, SK Hynix remains confident in the long-term demand for AI chips.

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