Morningstar: SK hynix and Samsung's Investment Plan May Bring Supply Glut Risk

BlockBeats News, June 29th, Samsung Electronics and SK Hynix announced a large-scale investment plan. Morningstar stock analyst Jing Jie Yu stated that SK Hynix's Icheon semiconductor cluster's total investment commitment is estimated to have reached about 600 trillion South Korean won. If the additional commitment is considered an independent investment, it may imply a significant risk of oversupply in the next decade. The uncertainty led to a temporary stock price decline today.

He pointed out that the current view still maintains that the pricing of storage chips will show a long-term cyclical trend. It is expected that new capacity will take at least two to three years to come online. Initial demand will outstrip supply, but later in the cycle, oversupply may occur as peak capacity coincides with a slowdown in demand. It is believed that the shortage of storage chips will worsen, but long-term agreements and manufacturers generating substantial cash are driving a series of capacity investments. Unless the return on investment of hyperscale cloud service providers can consistently keep up with sales volume and price increases throughout the period, this trend is unlikely to be sustained over the next decade.