Wall Street Times

South Korea wants to become AI chip manufacturing leaders

South Korea
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South Korea — Artificial intelligence has been the most prominent development in a range of commercial areas for about a year. Midjourney and ChatGPT are two of the most divisive artificial intelligence systems to date, attracting both experts and laypeople. As a result, many businesses have moved their attention to the use of artificial intelligence.

Because of the close relationship between AI and technology, South Korea has increased its efforts to become the leading provider of AI chips. South Korea, according to industry analysts, offers all of the advantages required to win the global AI chip race. It is already a major participant in the memory chip business and has created one of the most sophisticated artificial intelligence ecosystems on the market.

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The country’s strength and targets

According to its strategy, the Asian country intends to be one of the world’s top three AI powerhouses by 2027, trailing only the United States and China. Dalton Investments’ senior research analyst, James Lim, addressed how South Korea may climb to the forefront of a new age.

“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.”

South Korea’s minister of research, information, and communications technology, Jong-ho Lee, has stated that the government plans to keep its power structure on memory chips.

“South Korea seeks to emerge as a prominent player in rapidly growing and promising areas such as AI semiconductors,” said Lee.

The global hype

In the months after ChatGPT’s meteoric rise, there has been a surge in demand for high-performance memory chips. To mention a few examples, generative AI is a cutting-edge technology industry that creates material such as text, pictures, and code.

The chips enable generative AI models to retain the vast majority of data from previous encounters while also remembering user preferences, resulting in near-human answers.

“In order for the use of AI, including ultra-large language models, a significant number of semiconductor chips are required to operate,” said Lee. “And global companies are competing fiercely to create high-performance and low-power AI semiconductors optimized for AI computation.”

The firms leading the way

Samsung Electronics and SK Hynix of South Korea have shown themselves as the world’s top manufacturers of dynamic memory chips. Businesses have been spending heavily in AI research and development in order to improve their capabilities.

In March, Samsung announced intentions to invest 400 trillion Korean won ($228 billion) in the development of a new South Korean semiconductor factory. According to SemiAnalysis’ Dylan Patel, Samsung is investing significantly.

“And why is that? So they can catch up on technology, so they can continue to maintain their leadership position,” said Patel.

Lee elaborated, saying: “We will spare no effort to help Korea secure world-class AI semiconductor technology by leveraging our memory semiconductor capabilities AI semiconductors.”

According to TrendForce data, Samsung has a 40.7% market share in the fourth quarter of 2022, while SK Hynix held a 28.8% share.

“South Korea has a robust local AI ecosystem, capable of competing with global tech giants,” said Sung Nako of South Korean internet titan Naver.

During a meeting with President Yoon Suk-yeol in June, OpenAI CEO Sam Altman requested that South Korea assume responsibility for AI chip production. Altman has also stated his willingness to invest in South Korean companies. He was also considering collaborating with well-known chipmakers such as Samsung Electronics.

“US chip giants Nvidia, Intel – they are not involved in the memory business,” Lim noted, implying that it would give South Korea a higher advantage. “They don’t have any exposure in the memory space.”

Samsung is well-known for manufacturing memory chips with more bandwidth than Nvidia. The author of “Samsung Rising,” Geoffrey Cain, forecasts that the South Korean corporation will increase its logic chip business.

A greater advantage

The South Korean government has aggressively supported the project by investing in artificial intelligence. The MSIT indicated in 2022 that it intends to spend 1.02 trillion won ($786 million) over the next five years on AI semiconductor research and development.

“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,” said Lee. “With AI being applied across various domains, even greater economic ripple effects can now be anticipated.”

Furthermore, South Korea will spend 862.8 billion won in high-end semiconductor manufacturing through new data centers and partnerships with entrepreneurs through 2030. The minister stated last month that the economic and industrial effect of AI semiconductors will continue to expand. Furthermore, he noted that the country enjoys a significant competitive edge in the foundry and memory chip industries.

“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,” said the minister in a June press release.

Meanwhile, Rebellions, a South Korean AI chip design startup, increased its attempts to compete with US chip makers, saying that its new chip outscored Nvidia’s counterpart by three orders of magnitude.

Park Sung-hyun, the CEO and co-founder of Rebellions, described the chip, saying, “In terms of AI workload, we have much better energy efficiency, cost efficiency… sometimes better performance.”

It has been alleged that Rebellions is seeking for government contracts as Seoul attempts to boost local firms.