Samsung Electronics Co., Ltd. (SSNLF) plans to invest over 110 trillion Korean won (approximately $73.3 billion) in capital expenditure and research and development by 2026. This substantial commitment reflects the company's strategy to expand its memory chip production capacity and deepen its exploration into areas such as artificial intelligence (AI). In a brief statement released on Thursday, the company indicated that this investment is aimed at solidifying its leadership position within the AI technology sector.
The memory market is currently experiencing a boom cycle characterized by supply shortages. Driven by the AI infrastructure boom, there is robust demand for High-Bandwidth Memory (HBM). Consequently, major memory chip producers like Samsung Electronics, SK Hynix, and Micron Technology (MU) are allocating an increasing share of their production capacity to HBM. This shift has led to significant shortages of general-purpose DRAM used in smartphones, personal computers, and servers. Against this backdrop, these memory chip giants are expanding capacity by constructing new facilities or upgrading existing manufacturing plants and advanced packaging facilities. Until the end of last year, these companies were cautiously controlling capacity expansion, having learned from past experiences of vicious price wars among memory chip manufacturers. However, given the ongoing prosperity in the memory chip market, they are now shifting towards aggressive expansion, as failing to increase production lines would make it difficult to meet current market demand.
**Cautious Optimism for 2028 as Samsung and SK Hynix Warn of Potential Supply-Demand Reversal**
Considering that building new production lines typically requires about two years, the combined capacity of Samsung, SK Hynix, and Micron is expected to reach a new level around 2028. At that point, the supply-demand balance faces the risk of a significant reshuffle. According to informed sources, the management of Samsung's Device Solutions (semiconductor) division is collaborating with business support teams to assess the possibility of a reversal in the global memory semiconductor market around 2028. Therefore, facing the potential risk of a supply-demand reversal, Samsung and SK Hynix have adopted a stance of "cautious optimism."
On one hand, these two giants are actively increasing investment in HBM and advanced DRAM processes. Samsung is advancing the transition to the 10-nanometer fifth-generation (1b) DRAM process at its Hwaseong campus and is expanding new production lines with its Pyeongtaek factory as the core. SK Hynix is continuing the construction of its next-generation DRAM production line at its new M15X facility. These moves are designed to capitalize on the high-profit window of opportunity presented by AI.
On the other hand, the two companies are exercising caution regarding expansion plans for general-purpose DRAM. SK Hynix has repeatedly stated publicly that it will base expansion decisions on "actual demand rather than optimistic expectations." Samsung has gone further, listing "avoiding excessive investment" as a key concern in its current memory business strategy. This restraint stems from a deep reflection on the potential crisis of oversupply that could emerge after the concentrated release of new capacity around 2028. Senior management within Samsung's DS division had previously pointed out that although AI demand is currently driving the memory chip industry into a "super cycle," the company will prioritize long-term profitability over mere market share expansion. This means that over the next two years, Samsung will precisely adjust its capacity plans based on demand forecasts to avoid the pitfalls of past boom-and-bust cycles, while cautiously expanding production and directing more capacity toward high-margin HBM.
SK Hynix has expressed similar views, emphasizing that it will maintain extreme prudence in capacity expansion. In its internal analysis, SK Hynix noted that as production lines for general-purpose DRAM (such as DDR5 and LPDDR6) continue to shift towards the more profitable HBM, supply tightness in the consumer market is likely to persist until 2028. The company plans to focus its capital expenditure on advanced packaging and HBM technology, rather than simply doubling traditional wafer capacity.
In contrast, Micron Technology appears more aggressive. The company is undertaking significant expansion of its DRAM production lines in Singapore and the United States and began large-scale equipment procurement last year to boost its HBM supply capabilities. Given the approximately two-year construction cycle for wafer fabs, Micron's new capacity is expected to come online集中ly around 2028.
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