Google, Microsoft, and Meta proposed "investing money to build production lines," but SK Hynix said, "We don't want money; we want five-year long-term contracts, higher advance payments, and minimum price guarantees."

Google, Microsoft, and Meta proposed "investing money to build production lines," but SK Hynix said, "We don't want money; we want five-year long-term contracts, higher advance payments, and minimum price guarantees."

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SK Hynix holds a monopoly position in HBM, turning the investment enthusiasm of tech giants into more favorable long-term contract terms, rather than factory equity.

Google’s parent company Alphabet, Microsoft, and Meta are competing to propose tens of trillions of Korean won in factory construction and equipment procurement funding support plans to SK Hynix, but the Korean chip giant is politely turning each one down. On May 7, Korean media outlet The Chosun Ilbo reported that, according to informed sources, SK Hynix’s management judged that, given their strong financial position and unshakable supplier status, accepting funds from specific customers would bring exclusive supply obligations, which would be more detrimental than beneficial.

SK Hynix is instead using the urgent demand of tech giants as a bargaining chip, demanding supply agreements of more than five years and adding higher prepayments and minimum price protection clauses. This strategy is backed by its near monopoly in the high-bandwidth memory (HBM) market—the company supplies the vast majority of HBM for Nvidia GPUs, and this year’s capacity is already fully sold out.

Analysts point out that this game reflects a profound reversal of supply and demand in the AI infrastructure arms race: tech giants, armed with $100 billion capital budgets, have nonetheless become “the underdogs” in the chip supply chain.

Rejecting Equity Ties: The Supply Trap Behind Factory Funding

According to reports, industry sources say SK Hynix has recently received memory semiconductor facility investment support proposals from Alphabet, Microsoft, and Meta, but management has not taken them seriously as viable options.

The core obstacle lies in contract structure risk. A semiconductor industry insider said:

“If you use funding from specific customers to build production lines, once that customer’s demand declines due to economic downturn, you may face the risk of being obliged to prioritize supply or even supply below market price. SK Hynix internally holds a negative stance and high vigilance toward the potential side effects of tech giants’ investments.”

The proposals from the tech giants mainly fall into two categories:

First, partially bearing the construction costs of SK Hynix’s phase-one (Y1) factory in the semiconductor cluster being built in Yongin, Gyeonggi-do—total investment for phase one is 31 trillion Korean won, after completion adding 350,000 wafers per month, bringing total capacity to about 900,000 wafers/month;

Second, sharing the procurement costs of ASML EUV (Extreme Ultraviolet) lithography equipment. A single unit of ASML’s latest generation High-NA EUV sells for about $400 million (about 550 billion Korean won), about twice the price of existing EUV machines. SK Hynix has already committed to an EUV equipment plan worth about 12 trillion Korean won.

The report says outsiders interpret the tech giants’ move to share equipment costs as an effort to preemptively lock in dedicated production lines via financial involvement.

Turning “Desperation” into Leverage: Long-Term Contracts, Prepayments, and Price Floors

While rejecting equity binding, SK Hynix is turning the tech giants’ urgent demand into more favorable contract terms.

A person familiar with SK Hynix’s situation said, “At present, we are signing long-term agreements (LTAs) with global tech giants. All parties are discussing various ways to strengthen contractual constraints.” Industry insiders interpret this as: demanding higher prepayments, ultra-long contracts of over five years, and guaranteed minimum prices. SK Hynix’s strategy is to convert the tech giants’ funding into more advantageous contract terms, not factory equity.

The anxiety of tech giants is fully supported by numbers. Microsoft disclosed in its recent financial report that its capital expenditure this year will reach $190 billion, with the cost increase in chips and components alone hitting $25 billion; Meta explicitly said it is “signing contracts that span the entire supply chain to secure necessary components in advance,” admitting its supply chain dominance strategy; Alphabet also revealed multi-billion dollar AI infrastructure investment plans.

The feverish intensity of the AI infrastructure investment race is exactly why these proposals are seen as “unprecedented.” SK Hynix’s chosen path is to maximize its bargaining gains without giving up control over its production capacity.

Supply-Demand Reversal: HBM Monopoly Enables Hynix’s “Super Supplier” Confidence

The fundamental reason SK Hynix can say “no” to tech giants’ funding plans is its structural advantage in the HBM market.

Currently, SK Hynix and Samsung Electronics together nearly monopolize the HBM market, and only these two companies can truly mass-produce high-end HBM needed for AI data centers. SK Hynix supplies the vast majority of HBM for Nvidia’s GPUs, and this year’s production is already fully committed. This supply-demand landscape has flipped the power dynamic—the tech giant customers have become the “weaker party” to SK Hynix.

Meanwhile, financials confirm this strong position. In the first quarter this year, SK Hynix posted an operating profit margin as high as 72%. In February, it announced another $15 billion (about 21 trillion won) in investment to expand next-generation memory production. Construction of the first phase of the Yongin cluster factory is progressing, and the first cleanroom will begin operation three months ahead of schedule, starting in February next year.

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