A new report by Bank of America has dashed optimistic expectations in the division by revealing that SK Hynix will only be able to deliver one-sixth of its planned new memory capacity increase by 2028. It is claimed that it will take ten years for the huge production facilities built in the Gwangju and Jeolla regions of South Korea to reach the targeted capacity.

While this delay deals a significant blow to the country’s goal of doubling memory production by 2030, it also deepens supply shortages in the global DRAM market.

The production bottleneck in question stands out as a critical development that will weaken the hand of companies in the price fixing case that has a great impact in the technology world.

The slowness in capacity expansion of memory manufacturers makes the supply crisis in the sector permanent.

Completing Production Facilities Requires a Long Process

The South Korean government is supporting major investments with the aim of doubling the country’s memory production capacity by 2030. But the facts on the ground show that these aims are quite optimistic.

According to Taiwanese industry experts, it will take five years to build just the infrastructure of the factories in Gwangju and Jeolla regions. It will then take another three to four years for the installation of clean rooms and advanced production equipment. Considering all these processes, a period of at least ten years is required to establish a full-fledged production ecosystem.

Closure of old generation facilities due to technological upgrades or inefficiency suppresses net capacity increase rates. This situation causes the volume of new memory to be released to be far below expectations.

Delays Pose Risk in Price Fixing Case

The giants of the memory world, Samsung, SK Hynix and Micron, recently faced a class action lawsuit filed in California federal court.

The plaintiffs allege that these three companies exploited their dominant positions in the market to manipulate prices. It is argued that the transition to artificial intelligence-focused high bandwidth memory (HBM) production is used as an excuse to restrict the production of older formats such as DDR3 and DDR4.

Restrictions in production strengthen the thesis that companies manipulate the market.

Analysts question whether SK Hynix’s failure to meet capacity targets will constitute a defense in favor of the companies in court proceedings.

If the production increase is actually much slower than predicted, this could become evidence supporting the thesis that companies are “consciously restricting supply”. This uncertainty in the memory market leaves both technology manufacturers and end consumers facing long-term price fluctuations.

How do you think the failure of memory giants to increase their production capacity will affect the prices of technology products in the coming years? Don’t forget to share your intentions and assumptions with us.