South Korea’s dominance in memory chips gives it an edge in the AI ​​race

Industry insiders say South Korea’s dominance in the memory chip market and robust artificial intelligence ecosystem have given it an edge in the global AI chip race.

“Korea is very strong in memory chips. AI certainly needs a lot of memory,” said James Lim, senior research analyst at Dalton Investments. It’s an advantage,” he said.

According to the country’s “digital strategy,” South Korea aims to become one of the world’s top three AI powerhouses after the United States and China by 2027.

The country’s Minister of Science, Technology and Information and Communications Technology Lee Jong-ho told CNBC that the country “aims to maintain its leading position in the memory semiconductor field.”

“South Korea aims to emerge as a strong player in fast-growing and promising areas such as AI semiconductors,” Lee said.

Large language models such as ChatGPT (which have sparked an explosion of global AI adoption in recent months) increasingly require high-performance memory chips. Such chips enable generative AI models to remember details of past conversations and user preferences, and generate human-like responses.

Memory chips are also used as storage devices in computers, smartphones and tablets.

Generative AI is a type of artificial intelligence that can generate content such as text, images, and code.

“Using AI, including ultra-large language models, requires a significant number of semiconductor chips to operate, and global companies are looking for high-performance, low-power AI semiconductors optimized for AI computation. There is fierce competition in the development of ,” Lee said.

South Korean companies Samsung Electronics and SK Hynix, the world’s largest dynamic random access memory chip makers, are actively investing in AI research and development to enhance their capabilities.

Samsung announced in March that it planned to invest 300 trillion Korean won ($228 billion) in a new semiconductor facility in South Korea.

Dylan Patel of research and consulting firm Semianalysis told CNBC last month that Samsung is “spending, spending, spending.” “What is the reason? They are able to keep up with technology and maintain their leadership position.”

According to data from research firm Trendforce, Samsung’s market share in the fourth quarter of 2022 was 40.7%, followed by SK Hynix with 28.8% and Micron with 26.4%.

“South Korea has a strong local AI ecosystem that allows it to compete with global tech giants,” said Song Na-ko, a large-scale AI development executive at South Korean internet giant Naver.

Sam Altman, CEO of ChatGPT maker OpenAI, urged South Korea to take the lead in AI chip production when he met with South Korean President Yoon Seok-yeol in June. Altman also expressed interest in investing in South Korean startups and partnering with major chip makers such as Samsung Electronics.

“U.S. chip giants Nvidia and Intel are not involved in the memory business. We have no exposure in the memory sector,” said Dalton’s Lim, adding that this would benefit South Korea.

Samsung supplies Nvidia with high-bandwidth memory chips that fit into the US chipmaker’s latest A100 graphics processing unit that trains ChatGPT.

Jeffrey Cain, author of his 2020 book “Samsung Rising,” told CNBC last month that he sees Samsung “going even deeper into the logic chip space.” [that’s] AI chip, future application of semiconductor technology. “

The South Korean government is investing heavily in AI.

In 2022, MSIT said it would invest 1.02 trillion won ($786 million) in AI semiconductor research and development over the next five years.

“AI will not only drive the growth of digital industries such as cloud computing and the metaverse, but will also serve as a key factor in dramatically improving the productivity of traditional industries such as manufacturing and logistics,” Lee said. he told CNBC.

“As AI is applied to various areas, we can now expect greater economic ripple effects,” he said.

South Korea also plans to allocate KRW 826.2 billion by 2030 to manufacture high-end chips through new data centers and cooperation with startups.

“The economic and industrial value of AI semiconductors will continue to rise, and South Korea will have the upper hand in memory chips,” he said in a press release last month. [sector] and a foundry. “

He said, “We will make step-by-step progress in AI semiconductors by 2030 by leveraging the capabilities of memory semiconductors. Through additional development for application in data centers and training of AI semiconductor experts, we will make Korea a world-class AI. We will spare no efforts to secure semiconductor technology.” release.

To take on the US chip giant, South Korean AI chip design startup Rebellions claimed that its new chips exceed performance standards, outperforming Nvidia’s comparable GPUs by more than three times.

“When it comes to AI workloads, we’re seeing a lot more energy efficiency, cost efficiency, and in some cases, better performance,” said Park Sung-hyun, Co-Founder and CEO of Rebellions. he told CNBC in May.

The rebels are reportedly rushing to win government contracts as the city of Seoul seeks to strengthen local businesses.

“Thanks to OpenAI’s ChatGPT, we are seeing a lot of founders launching companies in the region and a lot of investors showing great interest in backing these startups with government backing. said CEO and Managing JP Lee. He is a partner of SoftBank Ventures Asia on CNBC’s Street Signs Asia.

— CNBC’s Katie Tarasov contributed to this report.