SK Hynix Weighs Japan Memory Fab Partnership to Supply AI Boom

(Bloomberg) -- SK Hynix Inc. is studying the feasibility of a joint venture to make memory chips in Japan, one of several options under consideration to meet surging AI demand while controlling production costs.

The South Korean supplier of dynamic and flash memory is considering various locations for a jointly operated plant, SK Inc. Chairman Chey Tae-won said on the sidelines of meetings between members of South Korea and Japan's chambers of commerce in Sendai.

The artificial intelligence boom has made Icheon-based SK Hynix the star jewel of Chey's SK Group, with the company's products helping Nvidia Corp. and data center developers deliver AI computation. SK Hynix last week held a groundbreaking ceremony for a chip packaging facility in Indiana, and the company is exploring further international expansion.

"We are looking all over Japan," Chey told Bloomberg News. "Anywhere with good power and good water." He declined to elaborate on potential partners or specific locations in Japan for such a venture, when asked. SK, which oversees a wide array of businesses spanning energy and telecom as well as chips, sets group-level allocations of capital for major investments.

SK Hynix is scouring the globe for possible chip production sites to meet voracious data storage needs from AI, while navigating US attempts to slow China's tech ambitions. The company plans a 54 trillion won ($39 billion) expansion of its chipmaking facilities at home in Korea and is also building an advanced memory packaging facility in West Lafayette, Indiana.

The search in Japan is part of a wider effort within SK Hynix to deepen cooperation with Japanese customers and suppliers. The company already holds a sizable indirect stake in Tokyo-based flash memory producer Kioxia Holdings Corp. and its Chief Executive Officer Kwak Noh-Jung last week said it's "carefully looking at how we can co-develop the NAND flash market with our customers and suppliers."

Along with high-bandwidth memory, NAND has seen a surge in demand as big-spending companies like Meta Platforms Inc. and Amazon.com Inc. vie to secure ever larger pools of data in storage with faster performance than traditional hard drives.