New analysis from Bank of America suggests that the actual additional memory chip production capacity SK hynix can bring online by 2028 may be only one-sixth of its original plan. This assessment not only significantly undermines the South Korean government's capacity expansion blueprint but also provides crucial supporting evidence for an ongoing class-action lawsuit alleging DRAM price-fixing.
Citing a recent Bank of America report, Korean media indicates that due to factors including old factory closures, technological upgrades, and process node shrinkage, South Korea's actual annual net increase in operational memory wafer capacity is less than 10%. This implies that the capacity growth by 2030 will fall far short of the "double capacity by 2030" target previously set by South Korean President Lee Jae-myung. Insiders in the memory chip industry further point out that SK hynix's new capacity by 2028 may only be equivalent to one-sixth of its initial plan.
This assessment directly impacts supply expectations for the DRAM market. Concurrently, Samsung, SK hynix, and Micron were hit with a class-action lawsuit in U.S. federal court in California on June 25 of this year, accused of colluding to manipulate DRAM prices. Analysts believe the reality of SK hynix's severely lagging capacity expansion will further weaken the three major manufacturers' defense in the lawsuit.
Capacity Expansion Timeline Far Exceeds Expectations
South Korean President Lee Jae-myung had previously actively promoted the large-scale wafer fabs being built by Samsung and SK hynix in Gwangju and Jeolla, respectively, in the country's southwest, positioning them as core pillars for achieving the "double capacity by 2030" goal. However, Bank of America's analysis reveals a significant gap between this optimistic projection and reality.
According to memory chip industry insiders, merely completing the foundation construction for the Gwangju and Jeolla sites will take approximately five years, followed by another three to four years for cleanroom setup and chip manufacturing equipment installation. The full establishment of the manufacturing ecosystem for these two sites is expected to take over a decade.
After accounting for capacity reductions from old factories being shut down for technological upgrades, South Korea's annual net increase in operational memory wafer capacity is under 10%. The cumulative increase by 2030 will be significantly lower than the government's stated target.
Supply Constriction Logic Supports Lawsuit Allegations
On June 25 this year, Samsung, SK hynix, and Micron were named in a class-action lawsuit in a California federal court. The lawsuit, filed on behalf of consumers and businesses who purchased commercial DRAM products during a recent period of price increases, alleges the three companies leveraged their dominant position in the global DRAM market. It claims they coordinated to reduce production of traditional memory formats like DDR3 and DDR4 under the guise of a strategic shift towards AI-critical High Bandwidth Memory (HBM), artificially driving up prices.
The capacity expansion lag highlighted in the Bank of America report aligns with the core logic of this lawsuit. If SK hynix's new capacity by 2028 is only one-sixth of the original plan, the market narrative of "massive new capacity coming online soon" becomes difficult to sustain. This also puts greater pressure on the three manufacturers' defense in the lawsuit, which argues that supply is constrained by objective factors.
Supply Tightness May Persist
This analysis further reinforces the view of long-term tightness in memory chip supply. The CEO of SK hynix has previously publicly warned that 2027 could be the "worst year ever" for the memory industry, with shortages potentially extending into the 2030s.
For investors, the substantial delay in the timeline for meaningful memory capacity expansion implies DRAM prices will remain subject to supply-side constraints for an extended period. Meanwhile, the progress and direction of the class-action lawsuit will become a significant variable influencing the valuations and market expectations for Samsung, SK hynix, and Micron.
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