Report: SK Hynix stops production of consumer-grade memory, shifting resources to B2B and AI server markets

# Source: Wall Street Insights

## By: Zhang Yaqi

According to media reports, following Micron, South Korean chipmaker SK Hynix is planning to halt the production of some consumer-grade DRAM and NAND Flash products, shifting its core resources to the B2B and AI server markets.

The global semiconductor industry is undergoing profound structural transformation driven by artificial intelligence (AI) demand. Major memory chip manufacturers are seizing the high ground of AI computing power through aggressive business restructuring and capital expenditure adjustments.

On the 14th, media reports stated that following Micron, South Korean chipmaker SK Hynix is planning to stop producing some consumer-grade DRAM and NAND Flash products, focusing its core resources on the B2B and AI server markets.

As a key measure for this strategic transformation, SK Hynix officially announced on Tuesday that it will invest 19 trillion won (approximately 12.9 billion US dollars) to build a new advanced packaging plant in Cheongju, South Korea, to meet the surging order demand for High-Bandwidth Memory (HBM) from tech giants such as NVIDIA.

As major enterprises tilt their production capacity massively toward AI-driven high-end products, the supply of traditional memory chips has shown signs of tightness, pushing up product prices significantly. Research firm TrendForce predicts that the average price of DRAM, including HBM, will increase by 50% to 55% quarter-on-quarter in this quarter. Samsung Electronics and SK Hynix also plan to further raise the price of server DRAM by 60% to 70% in the first quarter of 2026, and this upward price trend may continue for several years to come.

SK Hynix closed at 742,000 won per share today, up 0.54%.

## Unexpectedly Strong AI Demand: Memory Super Cycle Expected to Last Until at Least 2027

SK Hynix's huge 12.9-billion-US-dollar investment plan is not only aimed at expanding production capacity, but also at breaking through technical bottlenecks. According to the announcement, the new plant will focus on advanced packaging technology, a key link to improve chip performance and energy efficiency. Located in Cheongju, South Korea, the construction of the facility is scheduled to start in April this year and is expected to be completed and put into production by the end of 2027.

By then, the new plant will greatly enhance SK Hynix's ability to integrate multiple memory chips into a single high-density unit. This advanced packaging process can significantly improve data processing speed and energy efficiency while reducing the overall size of the chip, which is crucial for meeting the stringent bandwidth and energy consumption requirements of next-generation AI processors.

Market analysis points out that the focus of capital expenditure in the semiconductor industry is shifting toward AI-related infrastructure. Nomura believes that thanks to the unexpectedly strong demand for DRAM from AI servers and the surge in demand for enterprise-grade solid-state drives (eSSD), the "super cycle" of the global memory industry will last longer than expected, and this upward cycle is projected to continue until at least 2027.

Given that large-scale capacity release on the supply side will not happen until 2028 at the earliest, Nomura expects the memory market to remain in a state of supply shortage in the next few years. Benefiting from this positive factor, Nomura reaffirmed its "buy" rating on Samsung Electronics and SK Hynix. Nomura raised Samsung Electronics' target price by 6.7% to 1.6 million won and SK Hynix's target price by 4.8% to 880,000 won, believing that the valuations of the two companies are still attractive compared with industry peers, and with the significant improvement in profitability, their stock prices still have room for a rise of about 45% to 50%.

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