ED Imperative to stay ahead in memory chips
Samsung Electronics building in Seocho District, Seoul, Jan. 28. The Korean tech giant has said it will begin shipping sixth-generation high-bandwidth memory in the third week of February to power Nvidia's Vera Rubin.
Korean chipmakers must invest vigilantly in R&D; state support may well play a role
Korean tech giant Samsung has finally announced that it will start mass-producing sixth-generation high-bandwidth memory (HBM4) chips. For the company and its investors, the awaited news somewhat alleviates concerns about the company's competitiveness in the HBM sector, especially as the semiconductor sector makes up for one-fifth of the nation's exports and as Samsung Electronics and SK hynix together buttressed the recent hike in the Korean bourse.
Samsung's plan to ship starting next week to power Nvidia's AI accelerators including the Vera Rubine, combined with SK hynix's top-notch performance in the high-bandwidth chips, paints a positive outlook for Korean semiconductors. At least until we begin to take a broader view and look at the global market. As the firms and nations accelerate their artificial intelligence revolution, the pressing global demand for chips has prompted some overseas firms such as Dell and Intel to source Chinese memory chips over Korean ones. Supported by a massive state-led fund and policies, Chinese memory chip manufacturers have been making leaps and bounds. One of its top memory manufacturers, ChangXin Memory Technologies (CXMT), announced that it has begun mass production of HBM3, the 4th-generation HBM.
Experts in Korea are closely watching the gap in technology advancement between the two countries. When Korea began mass-producing HBM3 in 2023, it was estimated that it would take three years for Chinese firms to catch up. The three-year gap, most experts noted, is narrowing, considering that before HBM3, it was assumed that Chinese memory firms would need four years to reach that level.
One could arguably assess that with its dominance in the memory sector and recent advancement in HBM4, the Korean sector enjoys an overwhelming lead. It is true that Korea's Samsung and SK hynix, together with U.S.-based Micron Technology, account for 90 percent of the dynamic random access memory (DRAM) market share, according to many industry reports. But the same industry assessment papers also point out that an acceleration in China's catch-up speed in top memory technology will be a possible risk factor to watch out for.
Meanwhile, Korean firms need to focus on advancing their own cutting-edge technologies through investing in research and development. Korean policymakers and legislators must keep in mind that semiconductors form a vital loop in ensuring that a nation and firms have a stable supply chain, and work to support the businesses in ensuring technological advancements.
As one way to do that, policymakers and legislators should refer to the growth in China's tech-driven Fourth Industrial Revolution. The country's state support in that achievement remains incomparable, as its government-led Integrated Circuit Industry Investment Fund is regarded as the world's largest program subsidizing the semiconductor sector. China also produces a larger volume of engineering graduates than Korea.
A special bill that details support for the semiconductor sector just passed muster through the ruling Democratic Party of Korea-dominated National Assembly on Jan. 29. The bill, despite intentions to expand infrastructure support for semiconductor plants such as electricity lines and water, has kept the rigid 52-hour workweek limit intact despite calls from the industry for more labor flexibility. Direct support has been reduced as well. The bill inadvertently lays pressure on existing semiconductor clusters already active with its clauses to grant larger volume of support in terms of building infrastructure, and for tax relief to those that newly set up in regions farther from the capital. It's better late than never. The political mindset prevalent in the Assembly should make room to accommodate for a cold, rational perspective regarding the political economy facing Korea.