South Korea to the rescue: The world's biggest chipmakers will drop $590 billion to end RAMageddon, but there's a catch

Samsung Electronics and SK Hynix, 2 of the largest makers of representation chips connected the planet, volition put a combined $590 cardinal alongside the South Korean authorities to physique a sprawling caller manufacturing analyzable successful an effort to relieve the AI-driven shortage that has sent the terms of machine representation soaring worldwide.

South Korean President Lee Jae Myung, lasting alongside Samsung Chairman Lee Jae-yong and SK Group Chairman Chey Tae-won, unveiled the program connected Monday astatine the Blue House successful Seoul. The president announced plans to fortify the country's enactment successful semiconductors and grow its AI infrastructure done large-scale investments and caller manufacturing capacity, saying South Korea indispensable determination faster than rivals to unafraid the technologies underpinning the AI era, according to CNBC (1).

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The header fig — that $590 cardinal concern — is portion of what the South Korean authorities calls its "Three Mega Projects for the Great Leap Forward." The bundle spans caller representation fabs (2) successful the country's southwest, an precocious packaging clump successful the cardinal Chungcheong region, and a supply-chain hub successful the southeast. At its core, Samsung and SK Hynix volition each physique 2 chipmaking plants (1)— 4 successful full — for 800 trillion won (~$516 billion), the country's manufacture curate said, with the purpose of doubling South Korea's DRAM accumulation capableness wrong 5 years.

DRAM (dynamic random entree memory), for those who don't know, is the short-term representation wrong astir each laptop, phone, and server. It's what lets a instrumentality juggle the programs you're actively using, and it gets wiped each clip you powerfulness down. For astir of the past 2 decades, it got cheaper and much plentiful, astir predictably so. Then AI arrived, and the mathematics broke.

How "RAMageddon" throttled the satellite of user electronics

The shortage known arsenic "RAMageddon," arsenic Moneywise has explained successful its sum of the crisis, has a structural cause. AI information centers devour monolithic amounts of what's called high-bandwidth memory, oregon HBM — and making it eats up acold much mill capableness per spot than mean representation does.

In basal terms: When a shaper shifts wafer capableness toward HBM for AI servers, it pulls a disproportionate magnitude of mean representation retired of the planetary proviso pool. There's an evident nett motive present — HBM creates acold richer margins than commodity representation — truthful the 3 companies that predominate the market, Samsung, SK Hynix, and Micron, person steered their champion lines toward AI customers, which has led to everyone other warring implicit what remains.