In the context of surging demand for artificial intelligence computing power, global memory chip giant SK hynix (SKHY.US) has recently completed its historic US listing. Concurrently, the company's top executives have made significant statements, not only predicting the industry's most severe supply shortage by 2027 but also revealing plans for a "Memory as a Service" business model that could disrupt traditional hardware sales. These announcements reflect both the company's extreme optimism about the future as a core player in the AI supply chain and an attempt to fundamentally rewrite the "boom and bust" cycle that has plagued the memory chip industry for decades.
The 2027 Supply Crisis: Demand to Long Outstrip Capacity
SK hynix CEO Kwak Noh-jung issued what may be the industry's starkest shortage warning to date in an interview. He explicitly stated the global memory chip industry is heading toward the "most severe supply shortage in history" by 2027, with this demand-supply imbalance expected to persist throughout the next decade. "We predict that from a supply perspective, next year will be the worst in the industry's history," Kwak noted on the day the company's American Depositary Receipts began trading on Nasdaq. He explained that despite aggressive capacity expansion plans, customer demand continues to rise against physical manufacturing limits. "We still forecast that even beyond 2030, customer demand will outpace our supply capacity. But we are doing our utmost to address this issue."
SK Group Chairman Chey Tae-won painted an even more dramatic picture of the supply bottleneck in a separate interview. He suggested that a balance in memory chip supply and demand might only be achieved when humanity reaches "Artificial General Intelligence" (AGI). "Until that day comes, we will need a massive amount of memory." Chey stated that the advent of the ChatGPT era has triggered a persistent and widespread memory shortage, which is now rippling through supply chains and raising prices for various electronics, from iPads to Xbox consoles.
Breaking the Cycle: Long-Term Contracts and the Shift to "Memory as a Service"
The memory chip industry has long been plagued by severe boom-and-bust cycles, where manufacturers over-expand during upswings only to face price collapses. However, Kwak asserted that "the situation has clearly changed." He pointed out that customers today are no longer engaging in short-term spot purchases as before but are proactively seeking long-term supply agreements. "They believe the shortage will last longer," Kwak said. Chairman Chey was more direct, declaring, "This is no longer a cyclical business." He explained that even in a future downturn, these long-term agreements would help the company maintain shipment volumes and memory chip prices, "This actually creates a completely different situation for us."
Notably, Chey Tae-won revealed that SK hynix is conceptualizing a new business model—"Memory as a Service." This suggests that in the future, customers might not need to purchase physical semiconductors directly but could instead "rent" memory usage rights from SK hynix. Chey stated, "We can become a memory service provider. In the future, this is another area we can focus on." While he did not detail the specific mechanics, he emphasized the goal is to solve the memory capacity bottleneck, stating plainly, "We must overcome this challenge." This concept resembles the SaaS model in the software industry, where customers pay a usage fee for access to software or computing power without owning it outright.
US Fab Plans Revisited, Investment Pledges Far Exceed $35 Billion
Regarding global capacity layout, CEO Kwak stated that the US remains a candidate for future wafer fab investment, though no final decision has been made. He noted that the core criteria for site selection are the availability of sufficient land, power, water resources, and skilled labor at competitive manufacturing costs. If conditions are met, locations in the US, Japan, and Southeast Asia are under consideration.
Meanwhile, SK Group is placing huge bets on the US. Chairman Chey revealed the group's planned investment scale in the US is far beyond the currently announced $35 billion, stating, "My plan is for a much larger number, far greater than $35 billion." Currently, SK hynix has committed roughly $4 billion to build an advanced chip packaging plant in Indiana and an additional $10 billion to develop AI solution companies in the US, seeking new AI growth engines.
Regarding the Nasdaq listing, Chairman Chey was open to the possibility of further US stock offerings in the future, but only after delivering substantial returns to new investors. "The first thing we need to do is stabilize the stock price, and then, in the long term, we hope to unlock more upside potential."
Diverging Views on the AI Investment Boom
While the AI investment frenzy has lifted the entire semiconductor sector, concerns about a potential bubble persist. Recent reports of Apple diversifying parts of its semiconductor supply chain to Chinese suppliers and Meta attempting to commercialize excess AI computing capacity have fueled investor worries about a potential inflection point in the AI investment cycle. Prominent Wall Street figures like "Big Short" investor Michael Burry and Bridgewater founder Ray Dalio have also warned of an eventual AI bubble burst.
However, industry players and some investment banks remain bullish. Nvidia CEO Jensen Huang stated last month that AI memory shortages would persist for years due to strong demand, confirming SK hynix remains its largest memory supplier. UBS similarly expects the global DRAM industry to remain undersupplied at least until the second quarter of 2028. Bank of America continues to favor the AI investment cycle, forecasting global capital expenditure by hyperscale cloud providers to reach approximately $851 billion this year and surge to $1.15 trillion next year. The bank views the roughly $244 billion raised by these cloud firms this year more as balance sheet optimization rather than a sign of funding stress. Micron's recent increase in its US investment plan to 2035 from $200 billion to $250 billion further underscores the industry's fervent expectations for AI-era memory demand.
From Trough to Peak: A Rollercoaster in Performance and Share Price
Thanks to a heavy bet on High Bandwidth Memory (HBM), once ridiculed but now visionary, SK hynix has become one of the biggest winners in the AI gold rush. The company's operating profit for 2025 reached a record 47 trillion won (approximately $31 billion), doubling from 2024 and completely reversing the losses of 2023. This growth accelerated further in 2026, with LSEG data indicating projected operating profit for the April-June quarter to reach a staggering 65.5 trillion won.
The capital market reaction has been equally dramatic. Despite an 18% pullback over the past two weeks amid questions about the sustainability of the AI rally, SK hynix's share price has soared more than sevenfold over the past 12 months. On its Nasdaq debut, its ADR price surged 12.76% to close at $168.01, completing the largest US IPO by a foreign company in history, raising $26.5 billion. CEO Kwak compared the current AI infrastructure build-out to the expansion of the internet, a process he believes will span decades. "It took nearly 30 years to complete the internet infrastructure build-out. For AI, I believe the industry's scale will be far larger than the internet."
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