Mine is a 2017 i5 Macbook Air. I think 128 GB is severely limited for software development purpose these days.
512 is preferrable, because I have more space for Xcode, some VirtualBox VMs, etc. Is it possible to replace the SSD?
Yes. The 2017 MacBook Air's SSD is not soldered and is replaceable. It does however use a proprietary connector. You'll either have to get a compatible SSD from an Apple Service Provider, a 3rd party like OWC or use an adapter with an M.2 SSD.
There is a guide available on iFixit.