Sam Altman, the CEO of OpenAI, the developer of the ChatGPT, is reportedly expected to visit Korea on January 26th. Altman may hold meetings with top executives from Samsung Electronics and SK Group to strengthen their collaboration on High-Bandwidth Memory (HBM).

According to sources cited by The Korea Times, Sam Altman is making a slight adjustment for the potential meeting details with Samsung Electronics’ Chairman Lee Jae-yong and SK Group’s Chairman Chey Tae-won. 

OpenAI is set to engage in discussions with Samsung Electronics and SK Group to collaboratively develop artificial intelligence (AI) semiconductors, as part of OpenAI’s strategy to reduce heavy reliance on the AI chip leader NVIDIA.

Reportedly, Altman visited Korea in June of last year, and this upcoming visit is expected to last only about six hours. Most of the time is anticipated to be spent in closed-door meetings with leaders of Korean chip companies or other high-profile executives. 

Altman is keen on strengthening relationships with Korean startups and chip industry players, as it contributes to OpenAI’s development of large-scale language models, powering ChatGPT. OpenAI unveiled its latest model, GPT-4 Turbo, at the end of last year and is currently proceeding with planned upgrades to related services.

Regarding this matter, The Korea Times also cited a spokesman at SK Group, indicating that SK Group also did not confirm whether Chey and Altman will meet.

“Nothing specific has been confirmed over our top management’s schedule with Altman,” an official at SK Group said.

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(Photo credit: OpenAI)

SK hynix, the South Korean memory giant, has revealed plans to consider increasing production of specific DRAM in the first quarter due to improved market conditions. Concerns arise in the market regarding the potential resurgence of capacity utilization, challenging the consensus among memory manufacturers to reduce production for price enhancement, possibly hindering the upward trajectory of DRAM in the future.

According to a report by the Commercial Times, industry experts believe that major memory manufacturers, including Samsung, SK hynix, and Micron, are upgrading their production capacities to 1-alpha/beta advanced processes to meet the demand for more profitable DDR5 and High Bandwidth Memory (HBM). The outlook for niche DRAM product in the future is expected to remain positive.

SK Hynix CEO Kwak Noh-jung previously stated at the 2024 CES in Las Vegas that the company is considering increasing production of specific DRAM in the first quarter due to improved market conditions. Kwak mentioned that while the worst conditions for NAND Flash should be over, the industry’s recovery is slower. Therefore, any decision to increase production would likely be considered after the mid-year point.

Following this announcement, some industry insiders expressed concerns about the potential increase in memory manufacturers’ DRAM capacity utilization, which could negatively impact the future pricing trend of DRAM.

However, according to the Commercial Times, quoting a key figure in the Taiwanese memory industry revealed that SK Hynix’s planned increase in production primarily focuses on HBM for AI applications, with a slight increase in DDR5, while the production of DDR4 will continue to decrease.

As the three major manufacturers focus on 1-alpha/beta processes, increasing the supply of DDR5 and HBM, the pricing of niche-type DRAM is expected to gradually improve amid capacity constraints. Therefore, the perceived impact of SK Hynix’s increased production of specialized DRAM on the overall future DRAM pricing is not anticipated to be negative.

TrendForce points out that, considering the need for more advanced equipment to produce increased quantities of HBM and DDR5, the production capacity for DDR3 and DDR4 in the first quarter of 2024 is expected to decrease compared to the previous year.

However, due to market considerations and the ongoing shift towards DDR5 for high-end products, the demand for DDR3 and DDR4 is expected to slow down. This distribution of production capacity aligns with market trends and developments.

Tracking back the memory prices, from the fourth quarter of 2022 to the third quarter of 2023, the memory market experienced a downturn, prompting Samsung, SK Hynix, and Micron to collectively reduce production. By the fourth quarter of 2023, DRAM and NAND flash memory prices finally began to rebound, continuing into the first quarter of 2024, with the momentum of price increases continuing to be closely monitored by the market.

(Image: SK hynix)

Countries around the world are leaving no stone unturned in their pursuit of semiconductor development, and South Korea is no exception. South Korea has just unveiled an ambitious plan to invest a staggering 622 trillion Korean won (approximately $471 billion USD) in collaboration with industry giants Samsung Electronics and SK hynix, aiming to create the world’s largest semiconductor supercluster.

According to reports from The Korea Times, South Korea’s vision includes the construction of the world’s largest semiconductor cluster in Gyeonggi Province by 2047. As revealed by the Ministry of Trade, Industry, and Energy in South Korea, Samsung Electronics, SK hynix, and other semiconductor companies are set to pool their resources into building 16 new fabs, with the potential to generate over 3 million job opportunities.

This ambitious undertaking will involve an expansion of the existing mega cluster, which already boasts 19 production fabs and two research fabs spread across adjacent cities in the province. The new mega chip cluster, spanning a massive 2,102 square meters, is slated to commence production, churning out an impressive 7.7 million wafers each month, beginning in 2030.

Within this sprawling cluster, Samsung Electronics has outlined plans to construct six new fabs at the national industrial complex in Yongin, with an investment commitment of 360 trillion Korean won. Additionally, the company intends to establish three fabs in Pyeongtaek, involving an investment of 120 trillion Korean won, and three research fabs at an R&D center located in the Giheung District, at a cost of 20 trillion Korean won. Meanwhile, SK hynix is earmarking 122 trillion Korean won for the construction of four fabs at another industrial complex in Yongin.

The primary objective of this supercluster is to foster an environment conducive to the production of cutting-edge memory chips, including high bandwidth memory (HBM), and system semiconductors measuring 2 nanometers or more advanced nodes.

Reports suggest that with the establishment of this new cluster, the South Korean government has set ambitious targets for the country. By 2030, they aim to capture a significant 10% share of the system semiconductor market, a substantial increase from the current 3%. 

Furthermore, the government plans to boost self-sufficiency in the supply chain of critical materials, components, and equipment from the current 30% to an impressive 50% by the year 2030.

(Image: SK Hynix)

In response to the recovery in the memory market and the increasing demand for High Bandwidth Memory (HBM) driven by AI chips, South Korean memory giant SK Hynix is reportedly planning to upgrade part of its DRAM production equipment at its Wuxi plant to the fourth-generation of 10-nanometer process this year.

According to a report by Seoul Economic Daily, the Wuxi plant is a core production base for SK Hynix, contributing approximately 40% of its total DRAM production. Currently, the Wuxi facility is producing second and third-generation DRAM, which falls under the category of older products in the late 10-nanometer class.

As the semiconductor market enters a recovery phase, the expansion of SK Hynix’s high-performance chip capacity has become urgent. To maintain its market share in the High Bandwidth Memory (HBM) market, SK Hynix needs advanced products such as the fourth-generation of 10-nanometer DRAM or higher versions.

According to a previous TrendForce press release, in terms of competitive positioning, SK Hynix’s HBM3 products are leading other manufacturers and serve as the primary supplier for NVIDIA Server GPUs. Samsung, on the other hand, focuses on meeting orders from other cloud service providers.

SK hynix’s fifth-generation HBM (HBM3E), which began mass production in the first half of this year, has a maximum capacity of 36GB (288Gb) in its next-stage product. It achieves this through stacking 12 chips of 24Gb DRAM. In 2022, SK hynix first adopted the fourth-generation DRAM process to realize 24Gb DRAM. HBM3E requires the use of the fourth generation or higher versions of the DRAM manufacturing process to meet customer demands.

SK Hynix, in response to increasing HBM3E orders from key customers like NVIDIA, must find ways to convert the Wuxi DRAM process in addition to utilizing the capacity of its Icheon headquarters factory.

SK Hynix has been using Extreme Ultraviolet (EUV) lithography since the production of the fourth-generation of 10-nanometer DRAM. However, due to the inability to introduce EUV exposure equipment to Wuxi, the production of this DRAM becomes challenging. Notably, constrained by U.S. restrictions on the export of EUV exposure eqipment to China, transitioning the Wuxi plant to the fourth-generation of 10-nanometer DRAM and beyond will pose a significant challenge.

The report indicates that SK Hynix plans to complete part of the fourth-generation DRAM process on the Wuxi production line, then transport the chips to the Icheon plant for EUV application, and finally return them to Wuxi to complete the entire process. SK Hynix has experience with a similar approach during the Wuxi plant fire in 2013, overcoming disruptions in DRAM production.

Regarding the rumors about the Wuxi plant upgrade, SK Hynix stated that it cannot confirm the specific operational plans for the factory.

(Image: SK Hynix)

The recovery of the memory industry is evident, with Taiwanese companies such as Macronix, Nanya Technology, and Transcend all showing month-on-month revenue growth in December last year. Additionally, contract prices for DRAM and NAND Flash are expected to continue rising in the first quarter of 2024. However, the global second-largest memory manufacturer, SK Hynix, plans a expansion, introducing a variable element to the memory market.

According to a report by the Commercial Times, SK Hynix disclosed that it might reduce the scale of DRAM production cuts in the first quarter, while adjustments to the NAND Flash production strategy may occur in the second or third quarter, depending on the situation.

In response to major memory manufacturers’ expansion plans, Taiwanese memory firms believe that Hynix’s expansion should focus primarily on DDR5 and HBM (High-Bandwidth Memory) products. Nevertheless, Taiwan currently specializes in DDR4 products, and it is not expected to impact product pricing.

According to a press release from TrendForce published this week, the DRAM contract prices are estimated to increase by approximately 13–18% in 1Q24 with mobile DRAM leading the surge. It appears that due to the unclear demand outlook for the entire year of 2024, manufacturers believe that sustained production cuts are necessary to maintain the supply-demand balance in the memory industry.

For consumer DRAM, manufacturers are aggressively raising contract prices, which has prompted buyers to stockpile early. This has greatly improved purchasing momentum. However, the first quarter coincides with the industry’s off-season, and end sales are expected to be weak and lead to increased inventory levels due to buyers’ early stocking strategies.

Manufacturers generally believe that in 2024—with the expanding penetration of HBM and DDR5 each quarter—low-margin DDR4 capacity will be crowded out, thereby leading to shortages. As such, DDR4 contract prices are expected to outpace DDR3 in the first quarter by 10–15%. DDR3 continues to be supplied by Taiwanese manufacturers, and with generally high inventory levels, its contract price increase is estimated at 8–13% for 1Q24.

(Image: SK Hynix)