The demand for AI and sales of high-bandwidth memory caused a 42.1% increase in Korean semiconductor export prices in May.
TakeAway Points:
- AI demand drove a 42.1% YoY increase in South Korea’s semiconductor export prices in May, with SK Hynix’s HBM capacity sold out through 2025.
- By introducing cutting-edge technologies like GAA and backside power supply, Samsung Electronics is bolstering its foundry skills in an effort to draw in AI chip makers.
- In response to rising demand worldwide, SK Telecom’s Sapeon Korea and Rebellions Inc. intend to join forces to establish a preeminent AI chip business in South Korea.
South Korea’s Semiconductor’s Price Spike
The record-breaking demand for AI technology in May caused a sharp increase in the price of South Korea’s semiconductor exports. The fastest increase on record since the 1970s was seen in the semiconductor export-price index, which rose 42.1% in dollar terms year over year, according to statistics from the Bank of Korea.
This is in addition to a 41.4% rise in April. High-bandwidth memory (HBM), like those made by Nvidia Corp., is primarily responsible for the spike in popularity.
SK Hynix Inc. has reported that its production capacity for HBM is largely sold out through 2025, while Samsung Electronics Co. is facing challenges in getting its HBM product approved for use by Nvidia.
Memory chips, a cornerstone of South Korea’s tech industry alongside smartphones and displays, are seeing increased demand as global interest in AI development grows.
This has led to a significant uptick in memory exports since late last year, contributing to South Korea’s better-than-expected economic expansion in the first quarter. According to the Korea Customs Service, chip exports rose 36.6% in the first 10 days of May, indicating that the double-digit growth is likely to continue for the entire month. The shipments could see further boosts if Samsung secures orders from Nvidia and other chipmakers like Advanced Micro Devices Inc.
Samsung’s AI Plan
Samsung Electronics Co. has unveiled a series of technological advancements aimed at attracting AI chip manufacturers to its foundry business. Despite being the world’s leading memory-chip maker, Samsung has been striving to catch up with Taiwan Semiconductor Manufacturing Co. (TSMC) in the foundry market.
At its annual foundry forum in San Jose, California, Samsung laid out its chipmaking road map and vision for the AI era. The company’s share in the foundry market fell to 11% in the first quarter from 11.3% in the previous quarter, while TSMC’s share rose to 61.7% from 61.2%, according to TrendForce.
Samsung’s earnings are recovering, bolstered by demand for components used in AI computing systems.
This demand is strengthening its main memory chip division and providing opportunities to win outsourcing orders. However, Samsung must demonstrate that its production is advanced and reliable enough to attract significant commitments from demanding customers like Nvidia.
The company introduced advanced production technology, including backside power delivery network technology, which enhances power, performance, and area while significantly reducing voltage drop compared to its first-generation 2-nanometer process.
Samsung also highlighted its gate-all-around (GAA) technology, crucial for AI products. The company plans to mass-produce its second-generation 3-nanometer process in the second half of this year and deliver GAA on its upcoming 2-nanometer process. Samsung became the first in the industry to begin GAA-based 3-nanometer mass production in 2022. The company is also preparing for 1.4-nanometer mass production in 2027, with performance and yield targets on track.
SK’s AI Chip Merger
SK Telecom Co.’s AI chip startup unit, Sapeon Korea Inc., and rival Rebellions Inc. have agreed to merge their businesses to compete globally and capitalize on the growing demand for AI services.
The merger aims to create a leading AI chip company in South Korea. The two companies will start due diligence with the goal of completing discussions about the merger ratio and other details in the third quarter. Rebellions, backed by KT Corp., was most recently valued at 880 billion won ($640 million), while Sapeon was valued at 500 billion won. Sapeon is 84.5% owned by SK Telecom, SK Hynix Inc., and SK Square Co.
Rebellions was in discussions to select local financial advisers as part of a plan to prepare for an initial public offering (IPO) as soon as the second half of 2025. According to Chief Financial Officer Shin Sungkyue, today’s announcement will not change the plans for an IPO, although the timing may shift.
