The chairman of SK Hynix, Choi Tae-won, has warned that the supply-demand gap for AI-driven semiconductors will widen further next year, putting continued upward pressure on memory prices, with the global scramble for supply escalating to a "panic" level.
According to a report on July 20, Choi Tae-won stated at a forum that demand for AI semiconductors is expected to grow by 60% to 100% year-on-year next year, while overall memory semiconductor demand is also projected to increase by 50% to 60%. At the same time, major manufacturers have almost no substantive capacity expansion plans for next year, which will inevitably lead to a further widening of the supply-demand gap. He bluntly described the intensity of global competition for memory supply as "panic."
Although tight supply and demand have driven up memory prices, Choi Tae-won explicitly stated that current price levels are "abnormal" and do not signal a healthy market. He warned that PC and mobile phone manufacturers cannot continuously pass on memory price increases to end products. If prices remain too high, new competitors will flood the market, and governments may also intervene. He emphasized that semiconductor companies should not maintain high prices by restricting supply; instead, expanding supply and growing the market is a more valuable long-term strategy.
Explosive Demand, Severely Lagging Supply
According to the report, Choi Tae-won provided specific demand forecasts at the forum: AI semiconductor demand will grow by at least 60% to 100% next year, and even the overall memory semiconductor market will see growth of no less than 50% to 60%.
However, the pace of expansion on the supply side is far from keeping up with demand growth. He pointed out that currently, almost no company plans to significantly increase supply next year, meaning the supply-demand gap will continue to widen. Expanding capacity for advanced AI memory chips requires substantial capital investment and long construction cycles, while also facing constraints such as equipment and personnel shortages.
"We are doing our best to maximize supply, but the growth rate of demand is much faster than ours," Choi Tae-won said. "What I'm worried about is that prices will not fall but rise." He stated that SK's current strategy is to "build as much as possible."
Although tight supply and demand objectively support memory prices, Choi Tae-won is not optimistic about this situation. He clearly stated, "Prices must fall; current prices are abnormal," and noted that PC and mobile phone manufacturers cannot indefinitely pass on the cost of memory price increases to consumers, a trend that will ultimately put pressure on downstream industries.
He also warned that if prices remain at excessively high levels, it will bring two risks: first, attracting new competitors to enter the market, and second, prompting government intervention. Therefore, he emphasized that semiconductor companies should not artificially restrict supply to maintain high prices. "Even if profit margins are slightly compressed, expanding supply to grow the market itself can bring greater returns in the long run," he said.
Meanwhile, the report noted that Choi Tae-won pointed out that semiconductor supply shortages are no longer just a commercial issue between companies but have become a strategic issue directly related to national competitiveness. He stated that not only customer companies but also governments are actively intervening to secure memory supply, as "semiconductors have become core assets for economic and national security."
As competition for AI infrastructure intensifies, this scramble is evolving into a resource competition at the national level. He also expressed concerns about bottlenecks across the entire AI industry chain, predicting that the AI industry currently faces comprehensive shortages of core infrastructure such as GPUs, memory, and power, and more unexpected bottlenecks may emerge in the future beyond memory.
He believes that the AI market is undergoing a fundamental structural transformation at the industry level, not just ordinary economic cyclical fluctuations, and the supply shortage situation is likely to persist in the short term.
Cautious Stance on Stock Split Issue
Regarding the possibility of an SK Hynix stock split, which has attracted external attention, Choi Tae-won expressed a cautious attitude, stating that the matter "has not been fully studied." He said, "We can proceed if necessary, but I don’t think it’s the most important issue at the moment."
He also mentioned that he is not yet fully aware of the rules regarding the handling mechanism for American Depositary Receipts (ADRs) after a Korean stock split—whether it is adjusted automatically or requires a separate procedure. He stated that since domestic stocks and ADRs are listed simultaneously, a comprehensive review of relevant policies and procedures will be conducted before making a decision.
Regarding the controversial N% performance bonus originating from SK Hynix, which has sparked widespread discussion, Choi Tae-won stated that he does not believe it is a universally objectionable issue, adding, "Let's wait and see."
He explained that he hopes to allow employees to gain as much happiness as possible, but this must be premised on sharing benefits with stakeholders. "If employees' happiness harms the interests of stakeholders, for sustainable happiness, we must face and resolve this issue," he said.
He also noted that he has observed non-SK Hynix employees expressing approval of this mechanism and believes it can bring positive effects.
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