⚠ Capacity Is Being Added Into the PeakHigh threat

SK hynix (SKHY) — threat to the moat

Every memory downturn in history was manufactured by capacity ordered during the preceding upturn, and three producers are ordering now.

SK hynix opened the cleanroom of its M15X extension fab in Cheongju in October 2025, began putting wafers in during the first quarter of 2026, and is ramping it through the year. It also began building an integrated complex at Yongin in February 2025, with the first fab's phase-one cleanroom expected in the first quarter of 20271.

First half 2026 against first half 2025 (%)+231%Revenue+73%Capital expenditure+38%Property, plant, equipmentSK hynix semi-annual business report, H1 2026; PP&E June against June
Revenue has run far ahead of capacity so far. That gap is what the building closes.

Every memory downturn in history has been produced by capacity ordered during the preceding upturn. This is not a criticism of management; it is the structure of the industry. A fab takes years from decision to output, so the decision must be taken on a forecast, and the forecast is always made when conditions are good, because that is when the money exists to build. Capacity therefore arrives, reliably, somewhat after it was needed.

What is different this time is who is asking. The buyers are committing capital far ahead of delivery — Nvidia's purchase commitments went from about US$119 billion to about US$279 billion in a single quarter, primarily memory2 — which is a stronger demand signal than a market forecast. It is not the same as risk-free: a purchase commitment is a plan held on somebody else's balance sheet, made by buyers who are themselves spending far ahead of their own revenue.

The company's own language is 'capital expenditure discipline', which is the right instinct and the standard thing to say at this point in a cycle.

The number to watch is industry-wide bit supply growth against bit demand growth. When supply growth exceeds demand growth, the price falls, and it does not much matter whose name is on the fab.

References
  1. ReportedConstruction of the Yongin complex began in February 2025, with the first fab's phase-one cleanroom expected in the first quarter of 2027.
    SK hynix Inc., Form 424B4 prospectus for its Nasdaq offering (SEC, CIK 2120882) — FY2025 revenue W 97,147bn, cost of sales W 38,456bn, gross profit W 58,691bn, S&A W 5,019bn, R&D W 6,466bn and profit for the year W 42,948bn, against FY2024 revenue W 66,193bn / profit W 19,797bn and FY2023 revenue W 32,766bn / cost of sales W 33,299bn / gross loss W 533bn / loss for the year W 9,138bn; Q1 2026 revenue W 52,576bn, gross profit W 41,679bn, profit W 40,346bn. IDC market shares for Q1 2026: second in DRAM at 29.1%, first in HBM at 56.4%, second in NAND at 18.5%, with the three DRAM producers together above 90% of revenue. DRAM products were 77.1% of total sales in 2025 and 77.3% in Q1 2026; NAND 21.3% and 22.0%. Competitors named: Samsung Electronics, Micron Technology and CXMT in DRAM; Samsung Electronics, Kioxia, Micron Technology and Sandisk in NAND; competitive factors listed as 'pricing; manufacturing costs, yields and product availability; product performance, quality and reliability'. First to develop HBM using TSV packaging, commercialised HBM3E in 2024 and developed HBM4 in 2025; HBM carried a per-gigabyte price premium of more than five times traditional DRAM in 2025. M15X cleanroom opened October 2025 with wafer input from Q1 2026; Yongin construction began February 2025 with the first fab's phase-one cleanroom expected Q1 2027; an advanced packaging plant (P&T7) is under construction in Cheongju and one is planned in Indiana for the second half of 2028. Intel's NAND business cost US$6.6bn in December 2021 plus US$2.2bn in March 2025, operated as Solidigm; NAND mass production is transitioning from 176-layer to 238- and 321-layer technologies. Gartner forecasts DRAM revenue of US$143bn in 2025 rising to US$401bn in 2027, HBM US$33bn to US$86bn and NAND US$68bn to US$341bn. A substantial portion of sales is attributable to a limited number of customers located in the United States and China; the two largest were 14.8% and 12.4% of revenue in Q1 2026 and the largest was 23.9% of revenue in 2025. The offering was 177,900,000 ADSs at US$149.00, each ADS one-tenth of a common share, representing 17,790,000 shares against 712,702,365 outstanding; Baillie Gifford, Coatue and Situational Awareness Partners indicated non-binding interest of up to US$7bn. — FY2023-FY2025 and Q1 2026 · publ. 2026-07-10 · source ↗
  2. ReportedNVIDIA's purchase commitments rose from about US$119bn in the prior quarter to about US$279bn, primarily memory procurement.
    NVIDIA Q2 FY2027 CFO commentary (Form 8-K, exhibit 99.2) — Data Center revenue of $89,023M splits into Hyperscale $48,710M (+102% year on year, +13% sequentially), AI Clouds/Industrial & Enterprise $40,313M (+138%, +25%) and Edge Computing $7,198M (+27%, +13%); shipments of Data Center Hopper products to China during the quarter were less than 1% of Data Center revenue; purchase commitments increased from $119 billion in the prior quarter to $279 billion, primarily related to the procurement of memory; segment revenue was Compute & Networking $88,299M (+114%) and Graphics $7,922M (+46%) — Q2 FY2027 (quarter ended 26 July 2026) · publ. 2026-08-26 · source ↗
Sources
Generated September 23, 2026