SK Hynix said on Thursday it plans to begin volume production of its next-generation HBM4E memory chips at its Indiana facility in the third quarter of 2029, as the South Korean chipmaker prepares for what its chief executive expects to be a prolonged shortage of advanced memory driven by the expansion of artificial intelligence.

Chief Executive Kwak Noh-Jung said the company expects the memory shortage to persist through the end of 2030, offering a bullish outlook for a market that has emerged from a severe downturn and become one of the biggest beneficiaries of the AI infrastructure buildout.

“We see no clear signs of a memory downturn,” Kwak said, adding that any eventual slowdown was more likely to involve a moderation in demand than a sharp decline.

The comments underline how fundamentally AI has changed the memory-chip market. HBM, or high-bandwidth memory, has become an essential component of advanced AI accelerators because it allows processors to access large amounts of data at very high speeds while using less power than conventional memory configurations.

SK Hynix is investing more than $4 billion in its Indiana project, marking a major expansion of its U.S. manufacturing footprint and bringing advanced packaging and research capabilities closer to some of its largest customers, including Nvidia, Microsoft and Alphabet’s Google.

The facility at Purdue Research Park in West Lafayette is expected to begin cleanroom operations in the second half of 2028, with volume production of HBM4E scheduled for the third quarter of 2029.

Kwak said the site could eventually reach annual production capacity of hundreds of thousands of wafers. By 2030, SK Hynix expects Indiana to become an important U.S. production base for HBM as the company builds what it describes as an advanced memory supply chain in the country.

The facility will include a next-generation HBM packaging line and an AI semiconductor research and development center. That combination is strategically important because HBM production involves more than conventional wafer manufacturing. Advanced packaging is increasingly a critical part of AI-chip performance, as memory must be closely integrated with processors to meet the bandwidth and power requirements of large AI systems.

The investment also gives SK Hynix a way to diversify production geographically. Much of the world’s semiconductor manufacturing remains concentrated in Asia, while U.S. technology companies are rapidly expanding data-center capacity domestically. Locating advanced memory packaging and research in the United States could reduce logistical constraints and improve supply-chain coordination with major customers.

The timing reflects the extraordinary growth in demand for AI computing. Nvidia forecast on Wednesday that its revenue would increase 70% in the next fiscal year, reinforcing expectations that spending on AI data centers will remain elevated.

For SK Hynix, that demand has transformed HBM from a relatively specialized memory product into a major profit driver. SK Hynix held 58% of the global HBM market by revenue in the first quarter of 2026, according to Counterpoint Research, compared with 21% each for Samsung Electronics and Micron Technology. Its leading position gives the company an important advantage as AI chipmakers compete for increasingly scarce advanced memory.

HBM is also structurally different from traditional memory products. The chips are vertically stacked and tightly integrated with AI processors, requiring sophisticated manufacturing and packaging capabilities. Those technical barriers make it harder for new competitors to enter the market and have allowed leading suppliers to command stronger pricing than they typically achieve in commoditized memory markets.

That dynamic is helping explain Kwak’s unusually long-range outlook. Memory manufacturers have historically endured sharp boom-and-bust cycles, with periods of oversupply causing prices and profits to collapse. The rapid expansion of AI infrastructure, however, has introduced a new source of demand that is less dependent on traditional PCs and smartphones.

SK Hynix is effectively betting that AI accelerators, data centers and increasingly sophisticated computing systems will keep absorbing HBM output even if other segments of the semiconductor market weaken.

The company is not relying solely on its Indiana investment. Earlier this month, its board approved about 54.3 trillion won ($38.3 billion) in investments through 2031, including 35.2 trillion won for the second phase of its semiconductor manufacturing facilities in South Korea.

The U.S. project is also supported by Washington’s efforts to build domestic semiconductor capacity. The U.S. government finalized $458 million in CHIPS Act grants and up to $500 million in loans for SK Hynix in December 2024.

The Indiana facility is expected to generate about 7,000 direct and indirect jobs locally and strengthen the U.S. semiconductor supply chain.

SK Hynix, however, has been aiming to capture a large share of the AI industry; the company is positioning itself close to the center of the AI hardware ecosystem at a time when access to advanced memory has become one of the key constraints on scaling AI systems.

The company’s lead in HBM also puts it in direct competition with Samsung and Micron, both of which are investing heavily to expand their share of the market. The three memory giants are now competing not simply on production volumes but on the ability to deliver more advanced generations of HBM with higher bandwidth, lower power consumption and improved integration with AI processors.

That competition could intensify as customers develop increasingly powerful AI accelerators. SK Hynix’s decision to commit to HBM4E production years in advance signals that the company expects technological leadership and manufacturing capacity to remain critical even after today’s AI chips are replaced by newer generations.

Kwak’s forecast that shortages could persist until the end of 2030 is therefore more than a near-term pricing call. It is a bet that AI will fundamentally reshape the memory cycle and sustain demand for advanced products well beyond the current wave of data-center construction.

The risk, as always in semiconductors, is that companies collectively build capacity faster than demand develops. But SK Hynix’s investment strategy suggests it currently sees the greater danger in being unable to supply the next generation of AI systems than in having too much advanced memory capacity.

Bank of Japan Deputy Governor Ryozo Himino has strengthened expectations for an interest rate increase in September, warning that policymakers need to act in time to prevent inflation from moving persistently above the central bank’s 2% target.

Himino stopped short of committing to a September hike or indicating how quickly borrowing costs could rise thereafter. But his comments were broadly hawkish and reinforced market expectations that the BOJ is approaching another policy tightening cycle.

“We must balance the need to gain as much information as possible, and acting in a timely fashion to avoid being behind the curve on inflation,” Himino told reporters on Thursday.

“We will debate that balance at each meeting, mindful of the fact underlying inflation is approaching 2%,” he said.

Markets had been closely watching Himino’s remarks because of his previous record of providing relatively clear signals ahead of policy changes. His comments were interpreted as leaving the September meeting firmly open for a rate increase.

“He didn’t rule out the chance of a September rate hike and was generally hawkish as expected,” said Shotaro Mori, senior economist at SBI Shinsei Bank. “The September meeting is likely to be live.”

Reuters has reported, citing sources, that the BOJ is considering raising its policy rate as soon as September and could subsequently tighten monetary policy more aggressively than the current pace of roughly two increases a year. Expectations for a September move have strengthened following a sharp increase in wholesale inflation and increasingly hawkish signals from BOJ officials. Markets are now pricing in a rate increase with a high degree of confidence.

The central bank’s concern is now shifting from whether Japan can generate inflation to whether price growth could overshoot its target.

In a speech before his news conference, Himino said Japan had entered a phase in which policymakers must pay greater attention to upside risks to inflation.

“If underlying inflation deviates above our 2% target, that would have an adverse impact on the economy. We should pay greater attention to upside risks to prices than in the past,” Himino said.

“In-depth deliberations should be held at each monetary policy meeting with these perspectives in mind,” he added.

Several forces are contributing to the inflation risks.

Himino pointed to rising fuel costs linked to the conflict in the Middle East, strong global demand associated with artificial intelligence and elevated import prices resulting from the yen’s weakness. The combination is considered crucial for Japan because higher energy and import costs can quickly feed into household prices while also squeezing businesses.

Japan’s wholesale inflation rose 7.2% year-on-year in July, highlighting the strength of those cost pressures. Economists expect some of the impact from higher fuel prices to pass through to consumer prices with a lag.

Himino nevertheless maintained that his assessment of Japan’s broader economic and price outlook had not changed substantially since the BOJ’s July meeting. He said weak signals from second-quarter GDP data were likely to have been driven largely by technical factors, suggesting policymakers should not overreact to the recent economic slowdown.

The BOJ raised its key policy rate to 1% in June, the highest level in 31 years, before leaving rates unchanged at its July meeting. At the July meeting, however, policymakers issued some of their strongest warnings yet about rising inflation risks.

Himino is now arguing that maintaining excessively accommodative financial conditions could itself create risks.

“Raising rates in a timely manner will help avoid a spike in inflation and abrupt rate hikes in the future,” he said, adding that such an approach would ultimately benefit smaller companies.

He rejected the argument that additional rate increases would necessarily damage Japan’s still-fragile economy. Instead, Himino said adjusting financial conditions could improve the allocation of capital by directing funds toward investments with stronger growth potential.

“As we are still pressing on the accelerator, or keeping financial conditions accommodative, I believe we will need to ease off in a timely manner through rate hikes,” Himino said.

The language matters because the BOJ remains well behind most major central banks in terms of the level of interest rates, even after its recent tightening. Japan spent years battling deflation and weak wage growth, leaving policymakers reluctant to withdraw monetary support too quickly.

The policy environment has now changed.

Underlying inflation is approaching the BOJ’s 2% objective, while higher energy costs, a weak yen and strong global demand are creating additional upside risks. The challenge for the central bank is to withdraw accommodation without choking off the economic recovery that has allowed Japan to move away from its long period of deflation.

The timing of further increases will therefore depend heavily on incoming data.

Himino said policymakers would assess economic activity, prices and financial conditions at each meeting rather than commit to a predetermined path. That leaves September as a potentially important turning point. A rate increase would signal that the BOJ is becoming more confident that inflation is sufficiently entrenched to justify further normalization of monetary policy.

The bigger question for markets is what follows.

If inflation continues to accelerate, the BOJ could be forced to raise rates more frequently than its current roughly twice-yearly pace. That possibility is already being considered by markets, particularly as wholesale price growth accelerates and external cost pressures intensify.

At the same time, a more aggressive tightening cycle could strengthen the yen by narrowing the gap between Japanese and overseas interest rates. A stronger currency would help reduce imported inflation, although it could also weigh on Japanese exporters.

Himino’s comments therefore mark a delicate shift in the BOJ’s policy calculus. The central bank is no longer focused only on supporting Japan’s emergence from deflation. It must now guard against allowing an inflationary cycle to become entrenched.

While the message from Himino was not an explicit promise of a September hike, it was clear enough to keep the market focused on the possibility that the BOJ is preparing to move again. Analysts now believe that the central bank’s immediate task is to take its foot off the monetary accelerator gradually enough to preserve economic momentum, while moving quickly enough to prevent inflation from running beyond its 2% objective.