SK Hynix Chairman Choi Tae-won: The worst storage shortage may occur next year

Fast Technology reported on August 14 that Cui Taiyuan, chairman of SK Group and head of SK Hynix, recently issued an early warning in an exclusive interview with the media. The industry may face the most severe shortage of memory chips in history in 2027, and the competition among major technology companies for storage supply will continue to intensify. Cui Taiyuan said that the current market demand is experiencing explosive growth, and almost all customers are applying for supply that is nearly twice the original scale. The supply and demand game for memory chips has evolved into a war for resources. Without sufficient memory support, various AI computing equipment and AI chips cannot be put into normal mass production. He admitted frankly that he felt apologetic in the face of the rapidly rising storage prices. Continued price increases have spurred chip inflation, which directly drives up the costs of terminal products such as mobile phones and servers. However, due to the production capacity construction cycle, it is difficult to find effective mitigation measures in the short term. Building a new storage wafer factory requires a huge investment, and it generally takes 4 to 5 years from planning and construction to establishing effective production capacity. Currently, many manufacturers start their production expansion plans late and cannot keep up with the incremental demand generated by AI in time. Even if SK hynix plans to double its production capacity within five years, it will still be difficult to fully match the growth in market demand. At the data level, Cui Taiyuan predicts that the demand for AI-related semiconductors in 2027 will increase by 60% to 100% compared to this year, and the overall storage market demand growth will remain at 50% to 60%. AI servers continue to consume a large amount of HBM and high-end DRAM. Leading cloud manufacturers and AI companies have gone to South Korea in advance to negotiate long-term supply agreements. A large amount of advanced wafer production capacity is prioritized for computing power customers, which continues to squeeze the production capacity of LPDDR memory and UFS flash memory required for consumer electronics such as mobile phones and tablets. The impact of this structural capacity tilt is gradually being transmitted to the consumer side. The proportion of memory chips in the material cost of mobile phones continues to rise. The proportion of storage-related expenditures for flagship models has exceeded 30%. The pressure on mid- and low-end models is even more prominent. Manufacturers have more and more room to continue to absorb costs. Subsequent price increases for new phones and shrinking storage specifications of models in the same price range may become a common phenomenon. Consumers who want to buy a phone with a large memory will need to bear a higher purchase budget. At the same time,