(Aug 31): SK Hynix Inc is studying the feasibility of a joint venture to make memory chips in Japan, one of several options under consideration to meet surging artificial intelligence (AI) demand while controlling production costs.

The South Korean supplier of dynamic and flash memory is considering various locations for a jointly operated plant, SK Inc chairman Chey Tae-won said on the sidelines of meetings between members of South Korea and Japan’s chambers of commerce in Sendai.

The AI boom has made Icheon-based SK Hynix the crown jewel of Chey’s SK Group, with the company’s products helping Nvidia Corp and data centre developers deliver AI computation. SK Hynix last week held a groundbreaking ceremony for a chip packaging facility in Indiana, and the company is exploring further international expansion.

“We are looking all over Japan,” Chey told Bloomberg News. “Anywhere with good power and good water.” He declined to elaborate on potential partners, specific locations in Japan, or what product would be made, when asked. SK, which oversees a wide array of businesses spanning energy and telecom as well as chips, sets group-level allocations of capital for major investments.

A small-scale acquisition of a Japanese company is also a possibility, a person familiar with the matter said. The shape of any collaboration — such as a co-investment or a joint venture — would depend on the partner and the product manufactured, the person said, asking not be named discussing private deliberations.

SK Hynix is scouring the globe for possible chip production sites to meet voracious data storage needs from AI, while navigating US attempts to slow China’s tech ambitions. The company plans a 54 trillion won (US$39 billion or RM160 billion) expansion of its chipmaking facilities at home in Korea and is also building an advanced memory packaging facility in West Lafayette, Indiana.

The search in Japan is part of a wider effort within SK Hynix to deepen cooperation with Japanese customers and suppliers. The company already holds a sizeable indirect stake in Tokyo-based flash memory producer Kioxia Holdings Corp and its chief executive officer Kwak Noh-Jung last week said it’s “carefully looking at how we can co-develop the NAND flash market with our customers and suppliers”.

Along with high-bandwidth memory, NAND has seen a surge in demand as big-spending companies like Meta Platforms Inc. and Amazon.com Inc. vie to secure ever larger pools of data in storage with faster performance than traditional hard drives.

SK Hynix rival Micron Technology Inc has a factory in Hiroshima, western Japan. The country is home to a wide array of SK Hynix suppliers — from privately held Namics Corp to chip gear heavyweight Tokyo Electron Ltd — and customers including Sony Group Corp and Nintendo Co. The Japanese government has also shown willingness to heavily subsidise projects by international chipmakers such as Taiwan Semiconductor Manufacturing Co expanding production capacity in the country.

“Korea and Japan are coming together to form an economic bloc,” Chey, who is chairman of the Korea Chamber of Commerce and Industry, said during a speech Monday. “The two countries not only work together, but can complement one another.”

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