The future of the memory chip business lies in the demand and supply curve, and this, in turn, hinges on just how quickly SK Hynix’s Chinese operations can become fully normalized, according to a key Samsung Electronics executive.

“Next year’s investments depend on how much of demand we’ll see, and the supply that goes with it,” said Jun Dong-soo, head of Samsung’s memory chip business at KINTEX where the Korea Electronics Show is being held until Wednesday.

“And the supply depends on the normalization of SK Hynix’s Wuxi operations.”

SK Hynix is the world’s second-largest DRAM memory chip manufacturer following Samsung. DRAM chips are essential memory components of all smart devices.

A fire broke out on Sept. 4 in Wuxi, where SK Hynix produces half of its DRAM products.

Since then, DRAM prices have hit a record-high, mostly due to a shortage of supply.

According to DRAMeXchange, the contract price of the benchmark DDR3 2Gb DRAM rose 8.86 percent in the second half of September from a month earlier to $1.72, the highest level this year.

Partial recovery has been made, but a complete normalization is yet to come.

“Recovery will come soon enough,” according to Park Sung-wook SK Hynix president at the KES event.

Jun of Samsung added that in the long term, the fire could have a damaging effect on the industry, because it would disturb the demand and supply relations.

Regarding Samsung’s plans for a semiconductor plant in Xian of China, Jun said everything was “going as planned,” and that the company was aiming for mass production by early next year.

Last month, Samsung said it would be reinforcing its Chinese operations by injecting an additional $500 million into the envisioned plant in Xian to invest a total of $7.5 billion. This makes the project Samsung’s largest overseas investment for a chip-making plant.

By Kim Ji-hyun (jemmie@heraldcorp.com)