South Korea wants to be a top A.I. hub — its memory chip dominance could be an advantage
The landmark Namsan Seoul Tower.
Jung Yeon-je | Afp | Getty Images
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 in March said that it plans to invest 300 trillion Korean won ($228 billion) in a new semiconductor facility in South Korea.
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.
“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.
In 2022, the MSIT said it will be deploying 1.02 trillion won ($786 million) of funding for AI semiconductor research and development over the next five years.
“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.
South Korea will also allocate 826.2 billion won through 2030 to build high-end chips through new data centers and working with startups.
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.
Rebellions is reportedly racing to win government contracts as Seoul aims to bolster its local companies.
“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.
Elon Musk (L), and Peter Navarro (R).
Reuters
As Tesla shares plummeted for a fourth straight day, CEO Elon Musk let loose on President Donald Trump’s top trade advisor Peter Navarro.
Musk, the world’s richest person, started going after Navarro over the weekend, posting on X that a “PhD in econ from Harvard is a bad thing, not a good thing,” a reference to Navarro’s degree. Whatever subtlety remained at the beginning of the week has since vanished.
On Tuesday, Musk wrote that “Navarro is truly a moron,” noting that his comments about Tesla being a “car assembler,” as much are “demonstrably false.” Musk called Navarro “dumber than a sack of bricks,” before later apologizing to bricks. Musk also called Navarro “dangerously dumb.”
Musk’s attacks on Navarro represent the most public spat between members of President Trump’s inner circle since the term began in January, and show that the steep tariffs announced last week on more than 180 countries and territories don’t have universal approval in the administration.
When asked about the feud in a briefing on Tuesday, White House press secretary Karoline Leavitt said, “Look, these are obviously two individuals who have very different views on trade and on tariffs.”
“Boys will be boys, and we will let their public sparring continue,” she said.
For Musk, whose younger brother Kimbal — a restaurant owner, entrepreneur and Tesla board member — has joined in on the action, the name-calling appears to be tied to business conditions.
Tesla’s stock is down 22% in the past four trading sessions and 45% for the year. Tesla has lost more tha $585 billion in value since the calendar turned, equaling tens of billions of dollars in paper losses for Musk, who is also CEO of SpaceX and the owner of xAI and social network X.
Even before President Trump detailed his plan for widespread tariffs, he’d already placed a 25% tariff on vehicles not assembled in the U.S. Many analysts said Tesla could withstand those tariffs better than competitors because its vehicles sold in the U.S. are assembled domestically.
But the company’s production costs are poised to increase because of the tariffs on materials and parts from foreign suppliers. Canada and Mexico are among the leading sources of U.S. steel imports, and Canada is the nation’s largest supplier of aluminum, while China and Mexico are home to major suppliers of printed circuit boards to the automotive industry.
At a recent an event hosted by right-wing Italian Deputy Prime Minister Matteo Salvini, Musk said, “Both Europe and the United States should move, ideally, in my view, to a zero-tariff situation, effectively creating a free trade zone between Europe and North America.”
Musk, whose view on trade relations with Europe stands in stark contrast to the policies implemented by the president, has a vested interest in the region. Tesla has a large car factory outside of Berlin, and the European Commission previously turned to SpaceX for launches.
Even before the tariffs, Tesla’s business was faltering. Last week, the company reported a 13% year-over-year decline in first-quarter deliveries, missing analysts’ estimates. That report that landed days after Tesla’s stock price wrapped up its worst quarter since 2022.
Musk, who spent roughly $290 billion to help return Trump to the White House, is now leading the Department of Government Efficiency, or DOGE, which has slashed costs, eliminated regulations and cut tens of thousands of federal jobs. In the first quarter, Tesla was hit with waves of protests, boycotts and some criminal activity that targeted vehicles and facilities in response to Musk’s political rhetoric and his work in the White House.
Satya Nadella, CEO of Microsoft, laughs as he attends a session at the World Economic Forum in Davos, Switzerland, on Jan. 23, 2020.
Denis Balibouse | Reuters
Apple‘s 23% plunge over the past four trading sessions has again turned Microsoft into the world’s most valuable public company.
As of Tuesday’s close, Microsoft is worth $2.64 trillion, while Apple’s market cap stands at $2.59 trillion.
While the market broadly is getting hammered by President Donald Trump’s sweeping tariff plan, Apple is getting hit the hardest among tech’s megacap companies due to the iPhone maker’s reliance on China.
The Nasdaq is down 13% over the past four trading days, as President Trump’s decision to impose tariffs on imports from more than 100 countries has sparked fears of a recession brought on by rising prices. UBS analysts on Monday predicted that the price of the iPhone 16 Pro Max could jump as much as $350 in the U.S.
Both Apple and Microsoft, along with chipmaker Nvidia, were previously valued at upward of $3 trillion before the recent sell-off.
In January, Microsoft issued disappointing revenue guidance. Nevertheless, last week, as Jefferies analysts reduced their price targets on many software stocks, they wrote Microsoft was among the “companies who we view as more insulated” from tariff uncertainty.
Microsoft also had the highest market capitalization of any public company in early 2024, but Apple soon reclaimed the title.
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