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Memory chip manufacturing runs on a fundamental capacity constraint: new fabrication plants require massive upfront capital and extended buildouts, which means supply cannot respond quickly when demand spikes.
That structural lag defines the current moment. SK Hynix is committing $38 billion to build new memory chip plants into a market where prices have already surged on short supply and soaring demand.
The constraint behind the investment The economics of memory chips are cyclical precisely because capacity cannot be added overnight.
When demand outpaces existing fab output, prices rise and the manufacturers with available supply capture the margin. When new capacity eventually arrives, that pricing environment can reverse.
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