SK Hynix will invest 39.6 trillion won ($38.7 billion) to expand memory chip production, the world's largest DRAM maker announced on Monday, in a bet that demand for AI data center memory will keep growing.

The South Korean chipmaker plans to build its first four fabrication plants in Yongin, a city south of Seoul, and add a fifth plant at its existing campus in Cheongju. Construction of the first Yongin fab is scheduled to start in April 2025, with completion targeted for May 2027, the company said in a statement.

The announcement comes as SK Hynix posted its best quarterly profit since 2018, driven by sales of high-bandwidth memory chips used in AI accelerators like Nvidia's H100. The company is the dominant supplier of HBM, holding an estimated 50% share of a market that research firm TrendForce expects to grow more than 30% annually through 2026.

The Yongin cluster will sit on a 4.15 million square meter site in Gyeonggi Province. SK Hynix expects the full complex to be completed by 2047. The company did not disclose planned capacity for individual fabs or specify which memory types each plant will produce.

The Cheongju expansion will add an M15X fab to the company's existing M10 and M14 facilities there. SK Hynix said construction will begin in early 2025 and finish in May 2027, matching the timeline of the first Yongin plant.

The investment plan follows a two-year downturn in memory chip prices that forced SK Hynix and rivals Samsung Electronics and Micron Technology to cut output through 2023. Pricing has rebounded sharply since late 2023 as AI workloads drive demand for high-end DRAM and NAND flash, squeezing supply of conventional memory as well.

SK Hynix said it will fund the expansion through operating cash flow and debt, without issuing new shares. The company held 6.4 trillion won in cash and short-term assets at the end of September, against 13 trillion won in long-term debt.

The buildout positions SK Hynix to defend its HBM lead against Samsung, which began mass production of its own HBM3 chips in 2024 and has qualified as a supplier for some Nvidia products. Samsung is also expanding its Pyeongtaek campus with new capacity dedicated to advanced packaging for AI memory.

SK Hynix executives said the Yongin site gives the company flexibility to respond to demand cycles, allowing it to adjust construction pace fab by fab rather than committing to fixed capacity years in advance.

The company expects capital expenditure for 2025 to exceed the 17.8 trillion won it spent in 2024, with most of the increase going toward HBM capacity and advanced packaging infrastructure.