KCCI chief warns of chip supply crunch as memory demand set to nearly double

Korea Chamber of Commerce and Industry (KCCI) Chairman Chey Tae-won speaks during a press conference on the sidelines of the KCCI Jeju Forum on Jeju Island, Friday. Courtesy of KCCI

Korea Chamber of Commerce and Industry (KCCI) Chairman Chey Tae-won said global memory chip demand could nearly double next year, while overall semiconductor demand is expected to increase by 50 to 60 percent, underscoring the need to expand manufacturing capacity.

"I do not know if I would go so far as to call it complete chaos, but we are under immense lobbying and pressure," Chey said Friday on the sidelines of the KCCI Jeju Forum.

“Despite the surge in demand, there will be almost no increase in supply next year. As a result, the gap between supply and demand will widen even further next year than it has this year."

Chey, who also serves as chairman of SK Group, said surging demand and limited supply have become a government concern as well, describing the situation as a "national security issue." He said governments are increasingly stepping in to help secure memory chips for domestic companies to sustain manufacturing capacity and meet soaring global demand.

“This could become a serious issue. Although it is currently confined to companies, there is a high probability that governments will begin facing pressure from foreign counterparts in the future,” he said.

Chey added that repeated calls by U.S. Commerce Secretary Howard Lutnick for Korean chipmakers to invest in the United States no longer come as a surprise.

Chey stressed the need to rapidly expand production capacity, saying SK Group is willing to build plants anywhere in the world as long as the right conditions are in place. With demand expected to surge next year and beyond, he said the expansion must move quickly.

The SK hynix logo is seen behind a worker at its plant in Icheon, Gyeonggi Province, April 23. Yonhap

“We must do our absolute best to increase production at a rapid pace. The scale must also be massive. The current situation demands that we build wherever we can build,” he said.

“I believe we should build not only in the country’s southwestern region, but also in the United States if possible. Searching the entire world to prioritize where we can build the best, fastest and biggest has become an absolute lifeline for the Korean semiconductor industry.”

Last month, SK hynix, the chipmaking affiliate of SK Group, announced plans to invest 400 trillion won ($268 million) to build two new semiconductor plants in Gwangju.

Increasing production capacity is also required to lower the currently surging prices of chips due to a global shortage, Chey said.

“If the skyrocketing chip prices keep rising and worsen the ‘chipflation,' we will inevitably face a severe backlash,” he said. “Increasing supply to lower prices doesn't mean we won't make money. Only by protecting and nurturing the market can the Korean semiconductor industry sustain itself and grow.”

Regarding the ongoing management-labor dispute over bonus payments for SK hynix employees, Chey said the issue remains unresolved.

The company has proposed paying half of the agreed profit-sharing amount, which is calculated at 10 percent of operating profit, in company shares rather than cash to preserve liquidity. Employees have expressed dissatisfaction with the proposal.

"It would be a problem if everyone were unhappy with it. But I do not see the issue that way. I want to keep our employees as happy as possible, but we must also share that happiness with our stakeholders. If employee happiness comes at the expense of stakeholders, that benefit will no longer be sustainable," he said.

"I understand that there are some employees outside the labor union who support the company's plan. I believe this can also have a positive impact," he said.