The government of the Republic of Korea has unveiled a plan to invest at least $880 billion in memory capacity to ease the global shortage brought on by AI investment.
South Korea is home to two of the three dominant DRAM makers, Samsung Electronics and SK hynix. The third is Micron Technology, headquartered in Boise, Idaho. Together, the three companies control close to 90% of the global DRAM market, with Micron generally holding a low-20s percentage share.
The BBC reports that this is part of the country’s so-called Three Mega Projects to develop new chip production hubs, data centers and robotics technology. It comes in response to steps by regional rivals like Taiwan, China, and Japan to invest heavily in chip factories and other technologies.
“We must secure the core elements of AI faster than any other country,” said South Korean President Lee Jae-myung. “Semiconductors, physical AI, and AI data centers are the triple axis for a great leap forward.”
The memory shortage is due to a number of events happening at once. The industry was shifting from DDR4 to DDR5, which meant a change in manufacturing and conversion of equipment in the factories. DDR4 memory was slowly fading out in favor of DDR5, but that is a lengthy process of conversion.
The other big change, of course, was the build-out of AI data centers. Standard memory, GPU memory, high-bandwidth memory (HBM) used in AI accelerators, and NAND flash memory used in solid-state drives all use the same core memory technology, so with the explosion in demand for server memory, GPU accelerators and flash storage all happening at once, supply has been severely constrained.
The result has been skyrocketing prices and significant shortages of product. It’s having a spillover effect as well into other devices such as smartphones, which also use memory and now smartphone makers can’t get the memory they need for their phones and are passing on the cost increase to customers.
Lee also announced plans to build other AI infrastructure hubs outside of Seoul, since most of the country’s manufacturing and advanced technologies are concentrated around the nation’s capital. Lee said in a statement that the project was a matter of “survival” for the country to address the decline in rural areas due to the concentration of industries in Seoul.
The memory shortage crisis has prompted at least one also-ran to make a move in grabbing market share. China-based ChangXing Memory Technologies (CXMT), which has single digit market share and mostly is used in China, is going public shortly and plans to use the proceeds of the IPO to fund expansion.
It does not make HBM memory but it does make standard DRAM and that is in short supply along with everything else. It remains to be seen if the company can make any headway against the three entrenched giants in the memory space.
