SK Group chairman Chey Tae-won pledged to grow production of artificial intelligence (AI) memory chips to meet a surge in demand from the global data center buildout.
During conference in Washington on Friday last week, he also called high-bandwidth memory (HBM) a “monster chip” that is generating enormous profits for SK Hynix Inc.
While Chey did not specify the scale of his chip firm’s expansion, SK Hynix previously said that its capital expenditure this year would rise significantly from its spending last year to satisfy demand for HBM chips that are required to make accelerators designed by the likes of Nvidia Corp to train and run AI services.
Photo: Bloomberg
US tech firms from Microsoft Corp to Meta Platforms Inc are allocating about US$650 billion this year for infrastructure that gives them an edge in the race to build AI technologies. That record spending is causing a global shortage of memory chips, a market that is dominated by SK Hynix, Samsung Electronics Co and Micron Technology Inc.
SK Hynix has sold out its entire slate of memory chips this year, while Micron has done similarly with its HBM offerings.
However, Chey cautioned losses are still a possibility in the future due to potential changes in the competitive landscape caused by rapid technological shifts.
The average of analyst projections for SK Hynix’s annual operating profit for this year has risen to US$70 billion last month from about US$50 billion late last year, and some have revised that up again to more than US$100 billion, Chey said.
“That sounds like really good news,” Chey said. “But it could just as easily turn into a US$100 billion loss.”
Chey also highlighted mounting infrastructure challenges, saying SK Group is exploring building power plants alongside AI data centers, as failure to meet energy demand could be “disastrous.”
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