Key Takeaways:
SK Hynix will add only one-sixth of its planned DRAM capacity by 2028, a Bank of America analysis shows, reinforcing supply constraints that underpin a class-action price-fixing lawsuit against the three largest memory makers.
A Bank of America report reveals SK Hynix will add just one-sixth of its planned DRAM capacity by 2028, a supply shortfall that bolsters pricing power for the three dominant memory makers while simultaneously fueling a class-action lawsuit accusing them of collusion.
"These capacity timelines are unrealistic within the proposed schedules," a Taiwanese memory chip industry insider familiar with the analysis said, speaking on condition of anonymity.
After accounting for closures of older plants due to technology upgrades and process miniaturization, South Korea's annual net increase in operating memory wafer capacity will fall below 10 percent, the report found. That pace leaves the country's 2030 production target — set by President Lee Jae-myung to double capacity — far out of reach. Fab foundation work at SK Hynix's Gwangju and Jeolla sites alone will take about five years, followed by three to four years for clean rooms and equipment, with the full ecosystem requiring more than a decade.
The supply picture has direct legal consequences. On June 25, Samsung, SK Hynix and Micron Technology were sued in California federal court by consumers and businesses who accuse the trio of coordinating cuts to DDR3 and DDR4 production under the guise of transitioning to high-bandwidth memory for artificial intelligence, artificially inflating DRAM prices. The Bank of America findings undercut any defense that new supply is imminent.
Capacity math undermines legal defense
The lawsuit, filed in the Northern District of California, alleges the three companies control the vast majority of global DRAM supply and used their HBM pivot as cover to restrict output of older memory formats. SK Hynix's inability to meaningfully expand capacity through 2028 — when the industry will still be in the early stages of bringing new fabs online — makes it harder to argue that supply constraints were purely technical rather than strategic, legal analysts said.
SK Hynix held 56.4 percent of the global HBM market by revenue in the first quarter of 2026 and 29.1 percent of the broader DRAM market, according to IDC data. The company generated $63.8 billion in revenue in 2025 with a 49 percent operating margin, and its first-quarter 2026 revenue reached $34.5 billion. Its U.S. ADR offering in July raised about $26.5 billion, partly to fund new fabrication capacity.
Supply tightness to persist into next decade
SK Hynix's chief executive has warned that 2027 will be the memory industry's worst year and that shortages could persist into the 2030s. The Bank of America analysis suggests that timeline is realistic: even if construction accelerates, meaningful new wafer output from the Gwangju and Jeolla megafabs is unlikely before 2032.
For investors, the combination of structural supply constraints and litigation risk creates an unusual dynamic. DRAM prices and margins for Samsung, SK Hynix and Micron are likely to remain elevated in the near to medium term, supporting earnings. But the class-action lawsuit introduces potential liabilities that are difficult to quantify. SK Hynix trades at about 5.5 times forward earnings estimates for 2028, where consensus sees net income of roughly $240 billion — a valuation that reflects the earnings power but not the legal overhang.
This article is for informational purposes only and does not constitute investment advice.
