SEOUL, August 07 (AJP) -SK hynix is pressing ahead with a 54.3 trillion won ($38 billion) expansion of its memory production empire even as its shares have more than halved from their June highs amid oversupply and peak concerns, committing capital equivalent to about 45 percent of its shareholders' equity to new fabs in Yongin and Cheongju.
The world's leading supplier of high-bandwidth memory said Friday that its board approved 35.2 trillion won for construction of its second fab, or Y2, at the Yongin semiconductor cluster and another 19.1 trillion won for the M17 fab in Cheongju.
The two projects amount to roughly 45 percent of SK hynix's shareholders' equity of 120.7 trillion won. The Yongin investment alone represents 29.19 percent.
The scale of the bet stands in sharp contrast to the market's recent retreat from the chipmaker.
SK hynix closed Friday at 1,422,000 won, down about 17 percent from a week earlier and 52.4 percent from its record 2,987,000 won reached on June 25.
The selloff has come despite unprecedented earnings from the AI memory boom. SK hynix reported a record operating profit of 60.54 trillion won in the second quarter, up 557.2 percent from a year earlier, while first-half operating profit approached 100 trillion won.
The 54.3 trillion won earmarked for the two new fabs alone is equivalent to almost 90 percent of its entire second-quarter operating profit.
SK hynix nevertheless appears unwilling to slow its capacity race.
"In the AI era, technological competitiveness alone is not enough, and the ability to supply the volume customers need when they need it is itself competitiveness," the company said.
The company said the investment followed a detailed review of customers' long-term demand as AI infrastructure drives consumption of HBM and other advanced memory.
Yongin Y2 will be the second of four fabs planned at the semiconductor cluster south of Seoul and will become a major production base for next-generation DRAM, including HBM.
The facility will have a total floor area of about 1.13 million square meters. Construction is scheduled to begin in July next year, with its first clean room opening in June 2029.
Investment will be carried out through October 2031 and includes a support building and an integrated research and development center for testing and analyzing new products.
SK hynix is already building Y1, the first Yongin fab, with its first clean room scheduled to open in February next year.
The company has sharply accelerated the broader project, aiming to complete all four Yongin fabs by 2033, 12 years earlier than its previous 2045 target.
Power and water infrastructure needed through the operation of Y2 is already about 99 percent complete.
The 19.1 trillion won M17 project in Cheongju will expand SK hynix's NAND production base.
Construction is scheduled to start in February next year, with its first clean room opening in December 2028. Investment will run through April 2031.
Cheongju already houses the company's M11, M12 and M15 NAND fabs, giving SK hynix existing land, electricity and water infrastructure that could shorten construction and improve production efficiency.
The projects are part of the investment strategy unveiled in June under which SK hynix plans to pour 600 trillion won into the Yongin semiconductor cluster and another 100 trillion won into expanding its Cheongju production base.
The company plans to secure the physical production infrastructure first and then phase in clean-room expansion and equipment according to actual demand.
At the same time, the cash windfall is beginning to reach shareholders.
SK hynix separately declared a quarterly cash dividend of 375 won per common share, totaling 273.3 billion won, with Aug. 31 set as the record date.
More significantly, the company said it is actively reviewing additional shareholder-return measures and plans to finalize and announce them during the third quarter, bringing forward an earlier pledge to unveil a new shareholder-return policy by year-end.
With cash holdings swollen by record first-half earnings, market attention is now turning to whether SK hynix will pair its enormous capacity push with a larger-than-expected return of capital to shareholders bruised by the stock's 52 percent retreat from its peak.
AJP Takeaways
- SK hynix approved 54.3 trillion won ($38 billion) for new fabs in Yongin and Cheongju, pressing ahead with capacity expansion despite growing memory glut concerns.
- The spending equals about 45 percent of shareholders’ equity, underscoring the scale of its bet on sustained AI-driven memory demand.
- Yongin Y2 will focus on next-generation DRAM including HBM, while Cheongju M17 will expand NAND production capacity.
- The investment comes even as SK hynix shares have fallen more than 52 percent from their June 25 peak and 17 percent over the past week.
- Record earnings are giving SK hynix room to invest aggressively while also preparing additional shareholder-return measures in the third quarter.
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