$646 Billion Thrown at the AI "Memory Wall": South Korea's Memory Giants See Surging Production and Supply Chain Reshaping

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According to the latest disclosures, Samsung Group plans to spend 1,000 trillion Korean won (about $646 billion USD) over the next decade on semiconductors and AI infrastructure, while SK Hynix is pushing ahead with a U.S. listing to raise $29 billion. This series of massive capital expenditure plans will be officially announced on June 29 at a national briefing hosted by the President of South Korea.

As the countdown to the official unveiling of the new investment plan approaches, market attention has shifted from simple "capacity expansion" to the precise deployment of funding, and whether this capacity surge can translate into substantial long-term profit returns and shareholder value during the supply shortage cycle.

$646 Billion Investment Implementation and Financing Pathways

The core target of this multi-billion dollar investment plan is high value-added storage products and infrastructure for the AI era.

According to Korean media reports, Samsung Group intends to spend 1,000 trillion Korean won (about $646 billion USD) over the next decade, which will be the largest investment plan in Korea’s history. President Lee Jae-myung will officially announce the plan at the national briefing on June 29. Presidential policy chief Kim Yong-beom has revealed that "extraordinary" investment figures will be unveiled, focusing on semiconductors, AI data centers, and physical AI. Samsung executive Lee Jae-yong is expected to announce a data center investment plan in Asan on July 2.

Meanwhile, SK Hynix's financing moves are equally aggressive. To support its five-year strategy to double capacity, SK Hynix plans to list in the U.S. to raise $29 billion. The capital expenditure expansions of these two giants provide clear benchmarks for the capacity leap in the global memory market.

Technical Strategy Divergence and Structural Capacity Reshaping

After sharply reducing NAND flash capacity, Samsung and SK Hynix are fully shifting their resource focus toward HBM and next-generation DRAM production lines. In next-generation technology routes such as HBM4, the strategic divergence between the two giants has begun to emerge, which also determines the specific direction of their huge capital expenditures. SK Hynix has chosen to cooperate with TSMC, adopting its 12nm process to advance HBM4 R&D and mass production; Samsung sticks to its vertical integration strategy, using its own SF4X logic node.

This technical route difference means that hundreds of billions of dollars will be poured into the construction of advanced process wafer fabs, procurement of extreme ultraviolet (EUV) lithography machines, and expansion of advanced packaging lines. To improve yield and capacity for high-bandwidth memory, upgrades to production lines for advanced packaging technologies such as silicon via (TSV) etching and thermocompression bonding will take up a significant portion of investment.

Long-term Agreements Locking in Supply-Demand Tight Balance Benefits

Behind the massive capital expenditures is the memory manufacturers’ strong expectation of a tight supply-demand balance for the coming years. Currently, the main global memory makers’ HBM and advanced DRAM capacity are running at full tilt, and the industry generally expects the supply shortage for high-end memory chips to last until around 2028.

To lock in long-term gains and avoid cyclical volatility, Samsung and SK Hynix have fully implemented long-term supply agreement (LTA) frameworks. SK Hynix has previously reached a multibillion-dollar, three-year DDR5 supply agreement with Microsoft, and is negotiating a five-year general DRAM supply contract with Google. These contracts introduce a prepayment mechanism ranging from 10% to 30%, as well as minimum price guarantees and penalty clauses, providing a solid cash flow cushion for their massive capital expenditures. By structurally adjusting capacity and planning substantial DRAM price increases, the two companies are attempting to transform memory chips from strongly cyclical commodities into core technology components with stable premium capability.

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