South Korea’s dominance in the memory chip market and a robust artificial intelligence ecosystem gives it an advantage in the global AI chip race, said industry observers.
“South Korea is very strong in memory chips. AI does require a lot of memory. South Korea dominating in the memory market is definitely an advantage,” said James Lim, senior research analyst at Dalton Investments.
South Korea is aiming to become one of the world’s top three AI powerhouses by 2027, following closely behind the U.S. and China, according to the nation’s “digital strategy.”
The country’s minister for science and information and communications technology, Jong-ho Lee, told CNBC the country “aims to maintain its leading position in the memory semiconductor field.”
“South Korea seeks to emerge as a prominent player in rapidly growing and promising areas such as AI semiconductors,” said Lee.
Large language models such as ChatGPT — which caused global AI adoption to explode in recent months — are increasingly in need of high-performance memory chips. Such chips enable generative AI models to remember details from past conversations and user preferences in order to generate humanlike responses.
Generative AI is a type of artificial intelligence that can generate content such as text, images, code and more.
“In order for the use of AI, including ultra-large language models, a significant number of semiconductor chips are required to operate, and global companies are competing fiercely to create high-performance and low-power AI semiconductors optimized for AI computation,” Lee said.
Chip giants Samsung, SK Hynix
South Korean firms Samsung Electronics and SK Hynix are two of the world’s largest dynamic random-access memory chipmakers and have been actively investing in AI research and development to bolster their capabilities.
Samsung is “spending and spending and spending,” Dylan Patel of research and consulting firm SemiAnalysis told CNBC last month. “And why is that? So they can catch up on technology, so they can continue to maintain their leadership position.”
We will spare no effort to help Korea secure world-class AI semiconductor technology by leveraging our memory semiconductor capabilities to advance AI semiconductors…
Jong-ho Lee
Minister for Science and ICT
Data from research firm TrendForce showed that Samsung held a market share of 40.7% and SK Hynix held 28.8% in the same period in the fourth quarter of 2022, followed by Micron in third place at 26.4%. Memory chips are also used in computers, smartphones and tablets as storage devices.
“South Korea has a robust local AI ecosystem, capable of competing with global tech giants,” said Sung Nako, executive for large scale AI development at South Korean internet giant Naver.
ChatGPT maker OpenAI’s CEO Sam Altman had urged South Korea to lead AI chip production during his meeting with South Korean President Yoon Suk-yeol in June. Altman also expressed interest in investing in South Korean startups and partnering with major chipmakers like Samsung Electronics.
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“U.S. chip giants Nvidia, Intel — they are not involved in the memory business. They don’t have any exposure in the memory space,” said Dalton’s Lim, adding that this would give South Korea an advantage.
Samsung is the supplier of high bandwidth memory chips to Nvidia, which fit into the U.S. chipmaker’s latest A100 graphics processing units that train ChatGPT.
Geoffrey Cain, author of the 2020 book “Samsung Rising,” told CNBC last month that he sees Samsung “diving deeper into the logic chip segment. So, [that’s] the AI chips, the future applications for semiconductor technology.”
An ‘upper hand’
The South Korean government is investing heavily in AI.
“AI not only drives the growth of digital industries such as cloud computing and metaverse but also serves as a key factor in dramatically improving productivity in traditional industries such as manufacturing and logistics,” Lee told CNBC.
“With AI being applied across various domains, even greater economic ripple effects can now be anticipated,” he said.
In a press release last month, the minister said that “the economic and industrial value of AI semiconductor will continue to improve and Korea has the upper hand in the memory chip [sector] and foundry.”
“We will spare no effort to help Korea secure world-class AI semiconductor technology by leveraging our memory semiconductor capabilities to advance AI semiconductors in stages by 2030, developing additional to apply them to data centers, and fostering AI semiconductor experts,” he said in the release.
In a bid to challenge to U.S. chip giants, South Korean AI chip design startup Rebellions claimed its new chip surpassed performance standards, outperforming Nvidia’s equivalent GPUs by more than three times.
“In terms of AI workload, we have much better energy efficiency, cost efficiency … sometimes better performance,” Rebellions co-founder and CEO Park Sung-hyun told CNBC in May.
“I see a lot of — thanks to OpenAI’s ChatGPT — founders starting companies in the region, and also a lot of investors, with the support from the government, showing a high interest in backing these startups,” said JP Lee, CEO and managing partner at SoftBank Ventures Asia, on CNBC’s “Street Signs Asia.”
— CNBC’s Katie Tarasov contributed to this report.
Liz Reid, vice president, search, Google speaks during an event in New Delhi on December 19, 2022.
Sajjad Hussain | AFP | Getty Images
Testimony in Google‘s antitrust search remedies trial that wrapped hearings Friday shows how the company is calculating possible changes proposed by the Department of Justice.
Google head of search Liz Reid testified in court Tuesday that the company would need to divert between 1,000 and 2,000 employees, roughly 20% of Google’s search organization, to carry out some of the proposed remedies, a source with knowledge of the proceedings confirmed.
The testimony comes during the final days of the remedies trial, which will determine what penalties should be taken against Google after a judge last year ruled the company has held an illegal monopoly in its core market of internet search.
The DOJ, which filed the original antitrust suit and proposed remedies, asked the judge to force Google to share its data used for generating search results, such as click data. It also asked for the company to remove the use of “compelled syndication,” which refers to the practice of making certain deals with companies to ensure its search engine remains the default choice in browsers and smartphones.
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Google pays Apple billions of dollars per year to be the default search engine on iPhones. It’s lucrative for Apple and a valuable way for Google to get more search volume and users.
Apple’s SVP of Services Eddy Cue testified Wednesday that Apple chooses to feature Google because it’s “the best search engine.”
The DOJ also proposed the company divest its Chrome browser but that was not included in Reid’s initial calculation, the source confirmed.
Reid on Tuesday said Google’s proprietary “Knowledge Graph” database, which it uses to surface search results, contains more than 500 billion facts, according to the source, and that Google has invested more than $20 billion in engineering costs and content acquisition over more than a decade.
“People ask Google questions they wouldn’t ask anyone else,” she said, according to the source.
Reid echoed Google’s argument that sharing its data would create privacy risks, the source confirmed.
Closing arguments for the search remedies trial will take place May 29th and 30th, followed by the judge’s decision expected in August.
The company faces a separate remedies trial for its advertising tech business, which is scheduled to begin Sept. 22.
From left, Parker Conrad, co-founder and CEO of Rippling, and Kleiner Perkins investor Ilya Fushman speak at the venture firm’s Fellows Founders Summit in San Francisco in September 2022.
Rippling
Human resources software startup Rippling said Friday that its valuation has swelled to $16.8 billion in its latest fundraising round.
The company raised $450 million in the round, and has committed to buying an additional $200 million worth of shares from current and previous employees. The company’s valuation is up from $13.5 billion in a round a year ago.
Rippling said there was no lead investor. Baillie Gifford, Elad Gil, Goldman Sachs Growth and others participated in the round, according to a statement from the San Francisco-based company.
With the tech IPO market mostly dormant over the past three-plus years, and President Donald Trump’s new tariffs on imports leading several companies to delay planned offerings, the most high-profile late-stage tech startups continue to tap private markets for growth capital. Rippling co-founder and CEO Parker Conrad told CNBC in an interview the the company isn’t planning for an IPO in the near future.
Conrad also highlighted a change that’s taken place in public markets in recent years, since inflation began soaring in late 2021, followed by higher interest rates. With concerns about the economy swirling, many tech companies downsized and took other steps toward generating and preserving cash.
“It does look a lot like, in order to be successful in the public markets, your growth rates have to come down so that you can be profitable,” said Conrad, who avoided enacting layoffs. “And so for us, that sort of pushes things out until the company looks profitable and probably slower growing, right?”
At Rippling, annual revenue growth is well over 30%, Conrad said, though he didn’t provide an updated sales figure. The information reported last year that Rippling doubled annual recurring revenue to over $350 million by the end of 2023 from a year prior.
Given the pace of expansion, Conrad said he isn’t fixated on profits at the moment at Rippling, which ranked 14th on CNBC’s Disruptor 50 list.
Rippling offers payroll services, device management and corporate credit cards, among other products. Competitors include ADP, Paychex, Paycom Software and Paylocity.
There’s also privately held Deel, which Rippling sued in March for allegedly deploying a spy who collected confidential information. Conrad suggested that the publicity surrounding the case may be boosting business.
“I think it’s too early to say, looking at the data, how all of this is going to evolve from a market perspective, but certainly we see some companies that have said, ‘Hey, we’re talking to Rippling because of this,'” Conrad said.
Fortnite was booted from iPhones and Apple’s App Store in 2020, after Epic Games updated its software to link out to the company’s website and avoid Apple’s commissions. The move drew Apple’s anger, and kicked off a legal battle that has lasted for years.
Last month’s ruling, a victory for Epic Games, said that Apple was not allowed to charge a commission on link-outs or dictate if the links look like buttons, paving the way for Fortnite’s return.
Apple could still reject Fortnite’s submission. An Apple representative didn’t respond to a request for comment. Apple is appealing last month’s contempt ruling.
The announcement by Epic Games is the latest salvo in the battle between it and Apple, which has taken place in courts and with regulators around the world since 2020. Epic Games also sued Google, which operates the Play Store for Android phones.
Last month’s ruling has already shifted the economics of app development for iPhones.
Apple takes between 15% and 30% of purchases made using its in-app payment system. Linking to the web avoids those fees. Apple briefly allowed link-outs under its system but would charge a 27% commission, before last month’s ruling.
Developers including Amazon and Spotify have already updated their apps to avoid Apple’s commissions and direct customers to their own websites for payment.
Before last month, Amazon’s Kindle app told users they could not purchase a book in the iPhone app. After a recent update, the app now shows an orange “Get Book” button that links to Amazon’s website.
Fortnite has been available for iPhones in Europe since last year, through Epic Games’ store. Third-party app stores are allowed in Europe under the Digital Markets Act. Users have also been able to play Fortnite on iPhones and iPad through cloud gaming services.