Lawrence D. Loeb

[Exclusive] Memory Shortage Spreads… Samsung and SK Raise Investment in China Plants to KRW 1.5 Trillion Samsung Electronics and SK hynix are making large-scale facility investments in their plants in China to simultaneously upgrade manufacturing processes and expand production capacity. As the global boom in artificial intelligence (AI) investment deepens the supply shortage in memory semiconductors, the two companies are mobilizing even their Chinese plants to increase output. Through these large investments, Samsung and SK aim to improve NAND flash and DRAM production processes, thereby boosting chip supply and profitability. According to South Korea’s Financial Supervisory Service on the 24th, Samsung Electronics invested KRW 465.4 billion in its Xi’an plant in China last year, up 67.5% from the previous year’s KRW 277.8 billion. The Xi’an plant is Samsung Electronics’ only overseas NAND flash production base and accounts for about 40% of its total NAND output. After investing about KRW 698.4 billion in the Xi’an plant in 2019, Samsung made virtually no investment there from 2020 through 2023. However, the company resumed investment in 2024 with KRW 277.8 billion, and then increased the amount to KRW 465.4 billion last year, apparently upgrading the local production line. SK hynix also executed more than KRW 1 trillion in investment last year at its DRAM plant in Wuxi, China, and its NAND flash manufacturing subsidiary in Dalian. It invested KRW 581 billion in the Wuxi DRAM plant alone, up 102% from 2024’s KRW 287.3 billion, while also putting KRW 440.6 billion into the Dalian NAND plant, up 52%. This marks the first time since 2022—when it acquired Intel’s Dalian NAND plant—that SK hynix has made trillion-won-scale investments in its Chinese facilities. Behind the aggressive investment by the world’s two largest memory makers in Chinese production facilities, despite U.S. export restrictions on China, is the relentless wave of memory semiconductor orders. The memory market is currently experiencing a supply shortage to the extent that this year’s DRAM and NAND flash output is already effectively sold out. As AI services evolve from simple search toward more inference- and training-intensive “agentic” models, demand for high-performance DRAM is rising, while orders for ultra-high-performance memory needed for AI data centers are also surging. UBS Securities, for example, forecasts that the global semiconductor market will grow by more than 40% year over year to reach USD 1 trillion (about KRW 1,496 trillion) this year. On top of that, domestic demand in China remains solid thanks to Chinese investment in AI infrastructure. China’s memory semiconductor market approached RMB 458 billion (about KRW 99 trillion) last year and is expected to grow even further this year. Unable to meet global demand with domestic production facilities alone, Samsung Electronics and SK hynix are pushing to expand supply by upgrading one of their major production bases: their plants in China. Samsung, through additional large-scale investment, plans to convert the core process at its Xi’an NAND plant from 128-layer sixth-generation NAND to 236-layer eighth-generation NAND. An industry official said, “To prevent the leakage of national core technologies, overseas plants are generally kept about two generations behind domestic facilities,” adding, “Given that Samsung is scheduled to produce 400-layer tenth-generation NAND in Korea this year, the transition of the China plant to eighth-generation NAND is likely to accelerate.” SK hynix is also understood to have upgraded the DRAM manufacturing process at its Wuxi plant through its recent investment, from third-generation 10-nanometer-class (1z) DRAM to fourth-generation (1a). This will allow the Wuxi plant to mass-produce high-value-added products such as DDR5, which is expected to contribute significantly to earnings improvement. Another industry source said, “The Wuxi plant, which accounts for more than 30% of SK hynix’s total DRAM output, has now been converted into a production base for high-value-added products,” adding, “With expanded investment, the Dalian plant should also be able to improve its financial structure and production efficiency.”

I am now at 5 GPU providers being completely sold out for a single node of 8xH100s. I don’t think people understand the gravity of what is about to come.

At Waffle House this morning the waitress told me, unprompted, "We've got to take Kharg Island. Otherwise we won't be safe." During my taxi ride home, the driver observed, "They call it the 'Forbidden Island.' Well not for Trump! I voted for him to send our boys to Kharg."

On Nvidia $1T 2025-2027 from analysts meeting: They have strong visibility into $1T+ in revenue from Blackwell and Rubin alone, excluding all other products to keep it comparable to last year’s $500B. This figure is a baseline, with additional upside expected from deals closed through 2027. it does not include Rubin Ultra, Feynman, standalone CPUs (Vera), Groq, or any additional offerings (Not clear on associated networking).