SK chief warns AI memory shortage could turn geopolitical

SK Group Chairman Chey Tae-won warned at a press briefing during the 49th Korea Chamber of Commerce and Industry (KCCI) Jeju Forum that the global shortage of AI memory chips could escalate into a geopolitical issue. He emphasized that demand for AI memory is set to surge significantly, surpassing supply even after accelerated capacity expansions. According to Chey, current memory prices are “abnormal,” and prolonged high prices risk inviting new competitors and retaliatory actions from foreign governments. Chey outlined that customers have requested up to 100% more AI memory from SK hynix in 2027 compared to this year. With AI accounting for over half of all semiconductor usage, he projected total demand growth of at least 50 to 60%. However, supply is not matching this increase, as no major company is expected to add substantial new capacity in the coming year. The situation is particularly tight in high-bandwidth memory (HBM), a critical component for AI accelerators such as those produced by Nvidia. SK hynix holds a dominant position in the HBM market, capturing 58% of global revenue in Q1 2026, according to Counterpoint Research, while competitors like Micron and Samsung lag behind with shares of around 21%. The growing imbalance has led to intense lobbying efforts, not just from corporate clients but also from foreign governments, which are increasingly viewing memory access as a matter of economic security. Chey noted that while companies are currently absorbing the strain, governments are preparing to exert pressure on one another. He warned that sustained high prices could lead to “chipflation,” pushing PC and smartphone manufacturers to raise costs, attracting new entrants, and prompting geopolitical tensions akin to those faced by other Asian exporters. To counter these challenges, SK hynix is rapidly expanding both domestically and internationally. The company has moved the launch date of its first clean room at the Yongin cluster to February 2027 from May and has allocated an additional 21.6 trillion won ($14.52 billion) in March. Additionally, it is converting its Cheongju M15X plant into a dedicated DRAM base for HBMs. A large-scale expansion project, planned in collaboration with Samsung Electronics, is being considered for the Gwangju military airfield. Beyond domestic efforts, SK hynix is actively evaluating potential fabrication sites globally, prioritizing factors such as speed, scale, and availability of essential resources like power, water, and land. While U.S. locations are under review, Chey stressed that they are being assessed based on their own merits rather than as a response to specific U.S. demands. He expressed skepticism toward ongoing calls from U.S. Commerce Secretary Howard Lutnick for increased investment in the United States, noting that such requests have persisted since the early Trump administration without significant change. Despite these considerations, SK hynix’s only confirmed presence in the U.S. remains its $3.87 billion HBM advanced packaging and R&D facility in Indiana, announced in April 2024. This site focuses on back-end processes and research, reflecting the company’s strategic approach to maintaining technological leadership amid rising global competition.