South Korean chip giants Samsung and SK Hynix are investing nearly USD583 billion in new semiconductor fabrication sites. The move, backed by the government, aims to tackle the global memory chip shortage and 'chipflation' driven by AI.
South Korean chip giants Samsung and SK Hynix are scaling their semiconductor ambitions by committing nearly USD583 billion for two new fabrication sites, according to a report in the Korea Herald.
At the Presidential briefing, the two companies unveiled plans to build these facilities that will include four memory fabs in the southwest and advanced packaging plants in the North and South Chungcheong provinces, the report added.
Tackling Global 'Chipflation'
The move comes at a time when the shortage of memory chips worldwide is fueling what has come to be known as 'chipflation'. Morgan Stanley, which coined the term, said that memory chip prices have risen six-fold in the last year due to the staggering demand from AI data centres. Apple recently hiked prices of its MacBooks and iPads as it grapples with the memory chip crisis. Its chief, Tim Cook, had earlier in an interview with the Wall Street Journal said that the price was "unavouidable" despite Apple's best efforts to shield customers from the memory chip crisis.
Government Backs National Strategy
"Korea can no longer rely on a single capital-region chip belt," the Korea Heral report quoted Industry Minister Kim Jung-kwan as saying. The mnister stressed the importance of creating new semiconductor bases, calling them the backbone of the AI era and Korea's "last chance" to escape low growth. According to the report, the government will fully back the semiconductor expansion with a 3S+1F strategy comprising speed, stronghold and spearhead couple with a full-support system from central and local governments.
AI Boom Fuels Demand and Market Concerns
Samsung and SK Hynix have been one of the biggest winners of the AI boom that's sweeping across the tech world. The two companies make high-bandwidth memory chips that are in high demand as hyperscalers like Amazon, Alphabet and Microsoft ramp up capital spending to expand their data centre capacity.
Shares of SK Hynix fell 1.68 per cent while those of Samsung's dropped 4.76 per cent on Monday, tracking a more than 5 per cent fall in the Philadelphia Semiconductor Index on Friday. While the investors have rewarded the semiconductor stocks propelling SK Hynix, Samsung and American chip maker Micron into the trillion-dollar valuation club, there have been concerns around the rising costs of AI as well as the soaring valuations.
(Except for the headline, this story has not been edited by Asianet Newsable English staff and is published from a syndicated feed.)