"Big Tech is ramping up investment to astronomical levels... Samsung Electronics and SK Hynix expanding production capacity" – SK Securities

According to The Financial News, SK Securities stated, "The combined capital expenditure (capex) growth rate of the four major cloud service providers (CSPs) — Amazon, Google, Meta and Microsoft (MS) — surged from 55% year-on-year in 2024 to 65% last year," adding, "Contrary to concerns about a slowdown, the capex growth rate of the four CSPs is expected to reach 66% this year, indicating that the growth trend will continue."
In a report released on the 2nd, Lee Dong-joo, an analyst at SK Securities, explained, "The astronomical level of investment by front-end hyperscalers — companies that operate large-scale data centers required for artificial intelligence (AI) — is a powerful driver of memory demand and, furthermore, a signal that explosive memory capacity expansion will be required."
Brokerage industry observers note that hyperscalers’ massive investments translate directly into memory demand, because memory accounts for a substantial share of total costs in AI server racks. As a result, they interpret that memory production capacity will inevitably have to be expanded in line with this demand.
Lee said, "This year, expansion of memory production capacity is capped on the upside for new investments due to constraints on available cleanroom space," but added, "Since investment is currently focused on infrastructure, equipment investment will follow with a time lag." He continued, "The three major memory makers — Samsung Electronics, SK Hynix and Micron Technology — are also rushing their greenfield investment in new fabs, and the new plants of memory manufacturers are scheduled for completion in the first half of next year, with full-scale equipment investment to begin in the second half," adding, "The two domestic companies are expected to secure spare cleanroom space equivalent to up to 150,000 wafer starts per month each next year."
In fact, according to SK Securities, construction work on the P5 fabrication plant at Samsung Electronics’ Pyeongtaek Campus resumed in February this year, more than six months earlier than originally planned. Completion is estimated for the second quarter of next year. Unlike the existing Pyeongtaek fabs, P5 is designed as a three-story structure, and its design production capacity is expected to reach around 300,000 wafer starts per month. SK Hynix, for its part, began construction last year on Phase 1 of the Yongin Semiconductor Cluster. The fab will consist of PH1 through PH6, and framework work for Phase 1, covering PH1 to PH3, is currently under way. As the legal floor area ratio limit for the fab has been relaxed by a factor of 1.4, the cleanroom area is being expanded, and the total design production capacity of the first fab alone is expected to far exceed 300,000 wafer starts per month. The plant is scheduled for completion in February next year, and cleanrooms up to PH3 are expected to open sequentially by the end of next year.
soup@fnnews.com Lim Su-bin Reporter