SK Hynix to bring AI chip production to Indiana by 2029, memory shortage to last through 2030

South Korean chipmaker SK Hynix announced on Thursday that it will begin volume production of its next-generation HBM4E chips at its Indiana facility in the third quarter of 2029. Chief Executive Kwak Noh-Jung stated that the company expects the current memory chip shortage to persist through the end of 2030, with no clear signs of a downturn in sight.

The more than $4 billion project marks a significant expansion of SK Hynix's operations in the United States, driven by surging investment in artificial intelligence and the resulting demand for high-bandwidth memory (HBM). The company aims to bring production closer to major customers, including Nvidia, Microsoft, and Alphabet's Google.

What does the Indiana facility mean for SK Hynix and the AI industry?

Kwak said he saw no clear signs of a memory downturn and expected any eventual slowdown to involve moderating rather than sharply falling demand. He added that he was not concerned about the outlook beyond 2030. By 2030, the company expects Indiana to become a key HBM production base in the United States.

The facility, located at the Purdue Research Park in West Lafayette, is scheduled to begin cleanroom operations in the second half of 2028. A cleanroom is a highly controlled manufacturing space that keeps dust and other microscopic contaminants out during the chipmaking process. The site will house a next-generation HBM packaging line as well as an AI semiconductor research and development facility.

Kwak stated that SK Hynix aims to build an advanced memory supply chain in the United States, strengthening the resilience of the semiconductor industry.

Why is high-bandwidth memory so important for AI computing?

HBM is a specialised memory chip that stacks chips vertically to deliver faster data processing while consuming less power, making it well suited to the enormous computing demands of AI applications. Unlike conventional memory products, HBM chips are tightly integrated with AI processors, creating higher technological barriers to entry and giving suppliers greater pricing power. The product has emerged as a major growth driver for memory chipmakers after the industry's recent downturn.

Who dominates the global HBM market?

SK Hynix accounted for 58 per cent of the global HBM market by revenue in the first quarter of 2026, according to Counterpoint Research, well ahead of Samsung Electronics and Micron Technology, which each held a 21 per cent share.

Nvidia, a major customer for SK Hynix, forecast on Wednesday a 70 per cent jump in revenue in the next fiscal year, underscoring unabated demand for AI computing and reassuring investors about the durability of the AI spending boom. Kwak's comments suggest SK Hynix sees little evidence of a near-term reversal in the memory cycle.

What are the economic benefits for Indiana and the United States?

SK Hynix expects the facility and related supply-chain investment to create about 7,000 direct and indirect jobs locally and contribute to semiconductor supply-chain resilience. To help the company, the U.S. government finalised $458 million in grants and up to $500 million in loans under the CHIPS Act in December 2024.

Separately, SK Hynix's board approved earlier this month about 54.3 trillion won ($38.30 billion) in investments through 2031, including 35.2 trillion won for the second phase of construction of its chip fabrication plants in South Korea.

This development reflects a broader trend of nations and companies investing heavily in domestic semiconductor production, recognising the strategic importance of these technologies for economic growth and national security.