South Korea’s dominance in reminiscence chips a bonus in A.I. race

South Korea’s dominance within the reminiscence chip market and a strong synthetic intelligence ecosystem provides it a bonus within the world AI chip race, mentioned business observers.

“South Korea could be very sturdy in reminiscence chips. AI does require lots of reminiscence. South Korea dominating within the reminiscence market is certainly a bonus,” mentioned James Lim, senior analysis analyst at Dalton Investments.

South Korea is aiming to develop into one of many world’s prime three AI powerhouses by 2027, following carefully behind the U.S. and China, based on the nation’s “digital technique.”

The nation’s minister for science and data and communications expertise, Jong-ho Lee, instructed CNBC the nation “goals to take care of its main place within the reminiscence semiconductor subject.”

“South Korea seeks to emerge as a distinguished participant in quickly rising and promising areas reminiscent of AI semiconductors,” mentioned Lee.

Giant language fashions reminiscent of ChatGPT — which triggered world AI adoption to blow up in current months — are more and more in want of high-performance reminiscence chips. Such chips allow generative AI fashions to recollect particulars from previous conversations and consumer preferences in an effort to generate humanlike responses.

Generative AI is a sort of synthetic intelligence that may generate content material reminiscent of textual content, photos, code and extra.

“To ensure that using AI, together with ultra-large language fashions, a big variety of semiconductor chips are required to function, and world corporations are competing fiercely to create high-performance and low-power AI semiconductors optimized for AI computation,” Lee mentioned.

South Korean companies Samsung Electronics and SK Hynix are two of the world’s largest dynamic random-access reminiscence chipmakers and have been actively investing in AI analysis and improvement to bolster their capabilities.

Samsung in March mentioned that it plans to take a position 300 trillion Korean received ($228 billion) in a new semiconductor facility in South Korea.

Information from analysis agency TrendForce confirmed that Samsung held a market share of 40.7% and SK Hynix held 28.8% in the identical interval within the fourth quarter of 2022, adopted by Micron in third place at 26.4%. Reminiscence chips are additionally utilized in computer systems, smartphones and tablets as storage units.

“South Korea has a strong native AI ecosystem, able to competing with world tech giants,” mentioned Sung Nako, government for giant scale AI improvement at South Korean web big Naver.

ChatGPT maker OpenAI’s CEO Sam Altman had urged South Korea to guide AI chip manufacturing throughout his assembly with South Korean President Yoon Suk-yeol in June. Altman additionally expressed curiosity in investing in South Korean startups and partnering with main chipmakers like Samsung Electronics.

“U.S. chip giants Nvidia, Intel — they don’t seem to be concerned within the reminiscence enterprise. They have no publicity within the reminiscence area,” mentioned Dalton’s Lim, including that this may give South Korea a bonus.

Samsung is the provider of excessive bandwidth reminiscence chips to Nvidia, which match into the U.S. chipmaker’s newest A100 graphics processing items that practice ChatGPT.

Geoffrey Cain, writer of the 2020 e-book “Samsung Rising,” instructed CNBC final month that he sees Samsung “diving deeper into the logic chip phase. So, [that’s] the AI chips, the long run functions for semiconductor expertise.”

In 2022, the MSIT mentioned will probably be deploying 1.02 trillion received ($786 million) of funding for AI semiconductor analysis and improvement over the subsequent 5 years.

“AI not solely drives the expansion of digital industries reminiscent of cloud computing and metaverse but additionally serves as a key think about dramatically enhancing productiveness in conventional industries reminiscent of manufacturing and logistics,” Lee instructed CNBC.

“With AI being utilized throughout numerous domains, even larger financial ripple results can now be anticipated,” he mentioned.

South Korea will even allocate 826.2 billion received by means of 2030 to construct high-end chips by means of new knowledge facilities and dealing with startups.

In a press launch final month, the minister mentioned that “the financial and industrial worth of AI semiconductor will proceed to enhance and Korea has the higher hand within the reminiscence chip [sector] and foundry.”

“We are going to spare no effort to assist Korea safe world-class AI semiconductor expertise by leveraging our reminiscence semiconductor capabilities to advance AI semiconductors in phases by 2030, growing extra to use them to knowledge facilities, and fostering AI semiconductor consultants,” he mentioned within the launch.

In a bid to problem to U.S. chip giants, South Korean AI chip design startup Rebellions claimed its new chip surpassed efficiency requirements, outperforming Nvidia’s equal GPUs by greater than thrice.

“By way of AI workload, we now have significantly better vitality effectivity, value effectivity … generally higher efficiency,” Rebellions co-founder and CEO Park Sung-hyun instructed CNBC in Might.

Rebellions is reportedly racing to win authorities contracts as Seoul goals to bolster its native corporations.

“I see lots of — due to OpenAI’s ChatGPT — founders beginning corporations within the area, and in addition lots of traders, with the assist from the federal government, displaying a excessive curiosity in backing these startups,” mentioned JP Lee, CEO and managing accomplice at SoftBank Ventures Asia, on CNBC’s “Road Indicators Asia.”

— CNBC’s Katie Tarasov contributed to this report.