SK Chairman: Next year, demand for AI chips will increase by 100%, and memory prices will rise further.

SK Hynix Chairman Chey Tae-won warns that the AI-driven semiconductor supply and demand gap will further widen next year, with continued upward pressure on memory prices. The global competition for supply has escalated to a "panic" level.

On July 20, according to Korea's "Maeil Business Newspaper", Chey Tae-won stated at the Jeju Forum of the Korea Chamber of Commerce and Industry that next year's AI semiconductor demand is expected to increase by 60% to 100% year-on-year, and overall memory semiconductor demand will also rise by 50% to 60%. Meanwhile, major manufacturers have virtually no substantial capacity expansion plans for next year, and the supply gap will inevitably increase further. He bluntly said the intensity of global companies competing for memory supply "can only be described as 'panic'.

Although supply-demand tension has pushed up memory prices, Chey Tae-won clearly stated the current price level is "abnormal" and does not signal a healthy market. He warned that PC and smartphone manufacturers cannot continue to pass on the rising memory prices to end products. If prices are too high, new competitors will flood in, and governments may intervene. He emphasized that semiconductor companies should not maintain high prices by restricting supply. Expanding supply and growing the market is a more valuable long-term strategy.

Explosive Demand, Severely Lagging Supply

It is reported that Chey Tae-won provided specific demand forecasts at the forum: next year's AI semiconductor demand will grow at least 60% to 100%, and even the overall memory semiconductor market will not increase less than 50% to 60%.

However, the pace of supply-side expansion is far behind demand growth. He pointed out that currently, almost no company plans to substantially increase supply next year, meaning the supply-demand gap will continue to widen. Expanding production capacity for advanced AI memory chips requires massive capital investment and long construction cycles, while also facing equipment and personnel shortages.

"We are doing our best to maximize supply, but the speed of demand growth far exceeds us," Chey Tae-won said. "What worries me is that prices may not drop, but rise." He stated that SK's current strategy is "to build wherever possible."

Although supply-demand tension objectively supports memory prices, Chey Tae-won is not optimistic about this. He clearly stated, "Prices must go down; the current price level is abnormal," and pointed out that PC and phone manufacturers cannot indefinitely pass the cost of memory price increases to consumers, which will ultimately put pressure on downstream industries.

He also warned that maintaining prices at excessively high levels will bring two risks: First, it will attract new competitors into the market; second, it will prompt governments to intervene. Thus, he emphasized that semiconductor companies should not artificially restrict supply just to maintain high prices. "Even if profit margins are slightly squeezed, expanding supply to grow the market itself will bring greater long-term gains," he said.

Meanwhile, the report said Chey Tae-won pointed out that semiconductor supply shortages are no longer just a commercial problem between companies, but directly concern national competitiveness and strategic issues. He stated that not only client companies but also governments are actively involved to secure memory supply. "Semiconductors have become core assets for economic security and national security."

As competition for AI infrastructure heats up, this competition is evolving into a national-level resource race. He also expressed concerns about bottlenecks in the entire AI industry chain, predicting that the AI industry currently faces comprehensive shortages of GPUs, memory, power, and other core infrastructure, and that more unexpected bottlenecks may appear beyond memory in the future.

He believes the AI market is undergoing a fundamental structural transformation, not an ordinary economic cycle fluctuation, and that supply shortages are likely to persist in the short term.

Cautious Attitude on Stock Split Issue

Regarding the possibility of an SK Hynix stock split drawing public attention, Chey Tae-won expressed a cautious attitude, saying the matter "has not yet been thoroughly studied." He stated, "If necessary it can proceed, but at present I don't think it is the most important issue."

He also mentioned that he has not fully understood the rules on handling American Depositary Receipts (ADR) after a Korean stock split—that is, whether it's automatically adjusted or requires a separate process. He said, since both domestic stocks and ADRs are listed, relevant policies and procedures will be comprehensively reviewed before making a decision.

Regarding the widely discussed N% performance bonus issue, which originated from SK Hynix, Chey Tae-won said he does not think it is a universally objectionable issue. "Let's wait and see," he said.

He explained that he hopes employees can gain more happiness, but the premise is that it must be shared with stakeholders. "If employee happiness harms stakeholder interests, for sustainable happiness, we must face and address this issue."

He also said that he has noticed non-SK Hynix employees recognize this, and believes the mechanism can bring positive effects.

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