[Chip People] "Cracks Are Widening in the HBM Super-Boom... SK Hynix, Samsung, and Micron Will Form a Three-Strong System"

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The memory semiconductor market is enjoying an unprecedented boom thanks to the artificial intelligence (AI) supercycle, but there is also an emerging diagnosis that the high-bandwidth memory (HBM) market, long dominated by SK Hynix, is rapidly starting to crack. Explosive AI demand is instead widening the window of opportunity for latecomers, and with Samsung Electronics and Micron, both equipped with strong technology and capital, in hot pursuit, analysts expect the market structure to be rapidly reshaped into a “three-strong system.”

Kyunghee Kwon, a research fellow at the Korea Institute for Industrial Economics and Trade, stressed in an interview with The Asia Business Daily at the Sejong National Research Complex on the 2nd that changes in the memory market structure are inevitable. He said, “HBM has been led by SK Hynix, but we are now in a phase where demand exceeds supply capacity,” adding, “As this year passes, the HBM market could diversify into a structure where SK Hynix, Samsung Electronics, and Micron each account for roughly one-third.”

Kwon Kyunghee, a research fellow at the Korea Institute for Industrial Economics and Trade, is being interviewed by The Asia Business Daily. Sejong = Yun Dongju reporter

He explained, “With the AI boom, the unit prices of all DRAM products have surged explosively, so cost competitiveness per unit derived from capacity (production capability) no longer carries much meaning,” and added, “Traditional unit-price competitiveness is no longer working, and the market has instead become favorable for followers.” In particular, he emphasized that Micron has been rapidly increasing its presence as the effects of its acquisition of Elpida, its multi-site R&D facilities, and U.S. subsidies all work together.

Kwon said, “While Samsung and SK are locked in a process race at the 10-nanometer (1 nm = 1 billionth of a meter) level, Micron is said to be jumping straight to the 9-nanometer range, which makes it a ‘bloody fight.’” He also drew attention to the growth of the application-specific integrated circuit (ASIC) accelerator market rather than the standalone graphics processing unit (GPU) market. He noted, “By 2029, the ASIC accelerator market will catch up to reach 90 billion to 100 billion dollars,” adding, “That means a market of a similar size to today’s will emerge again within three years.” He went on to say, “The key is not who supplied how much volume to Nvidia, but, as HBM standards become more advanced, who is the first to mass-produce products with higher bandwidth and stability.”

In the long term, Kwon believes a structure could form that is relatively advantageous for Samsung Electronics. This is because, as HBM generations become more advanced, the importance of foundry processes increases in the packaging domain, including interposers. He said, “With each new generation, the importance of foundry processes grows,” and added, “The structure will favor players that have the production and development strength to withstand large-scale investments.”

He also forecast that the foundry market will move away from the long-standing single-pole structure centered on Taiwan’s TSMC and shift into a phase of diversification. With changes in the international political environment, the rise of AI, and the intertwining of security and sovereignty arguments, opportunities are opening up for late movers such as Samsung Electronics and Intel, he diagnosed. He said, “The fundamental background for the favorable conditions that allowed TSMC to grow - namely the worldview and international political strategy of Western leaders, and the cost structure shaped by tariff and non-tariff barriers - has all collapsed,” adding, “The AI supercycle has flung the doors wide open for latecomers.”

"AI Is a Hegemonic Device"...The U.S. Will Push Ahead Even If It Fails

Kyung Heekwon, a research fellow at the Korea Institute for Industrial Economics and Trade, is posing after finishing an interview with The Asia Business Daily. Sejong=Photo by Yun Dongju

He believes that the global AI investment boom is underpinned by U.S.-led military and geopolitical “deterrence.” Just as there is a theory that the advent of nuclear weapons has deterred large-scale wars, AI is likewise being perceived as a new hegemonic device that can block inter-state conflicts themselves. He said, “The United States has a sense of crisis that, if it falls behind in the AI race, its national capabilities could be constrained,” adding, “For this reason, a logic is at work that investment must continue regardless of cost or immediate performance.”

Under this policy stance, the United States has been pursuing the so-called “Golden Dome Project,” which connects unmanned forces and satellite networks through AI, and the recent AI craze is also an extension of the roadmap presented in the “National AI Strategy Report” led in 2019 by former Google co-founder Eric Schmidt, he explained. Because of this, he stressed that the recent wave of AI investments should be viewed not as mere technological diffusion, but as the building of national infrastructure that underpins military and geopolitical hegemony competition. He said, “Since issues of security and hegemony are embedded in this, U.S. companies will not easily stop injecting capital.”

"Can Korea Hold Out?...It Must Join the U.S.-Led Supply Chain"

He expressed concern that there is a growing perception that Korea holds excessive control in the global supply chain. While there is a view that Korea can “hold out” against U.S. tariff pressure and trade policies, he explained that within the broader U.S. framework, Korea is in reality closer to playing the role of supplying key hardware components than leading the AI ecosystem.

Kwon said, “Right now, memory demand is strong, so even that role alone is generating sufficient profits, but if we take an excessively hard-line stance based on this, it could become disadvantageous in the mid to long term.” He particularly pointed out that Micron’s new fabs under construction in Idaho and New York are scheduled to start operations sequentially from next year and the year after, and that major Taiwanese electronics manufacturers such as Foxconn, Wistron, and Pegatron are also rapidly establishing production bases in Mexico and across North America. In other words, the pace of reconfiguring a U.S.-centered ‘closed-loop’ supply chain strategy is faster than expected.

He said, “Now that the value of Korean memory has risen, this is precisely the golden time to go out aggressively into the market,” adding, “Instead of holding out too stubbornly, we need a strategy of quickly gaining a foothold where conditions allow.”

In the same context, he interpreted semiconductor manufacturing reshoring not as a matter of cost competition, but as a domain where strategic value takes precedence. He advised, “The trend of entrusting advanced-node semiconductor manufacturing to Asia purely because of cost competition will weaken going forward,” adding, “Both Taiwan and Korea could face difficulties within the ‘security and sovereignty’ framework.” The current moment, when bargaining power has increased thanks to the AI supercycle, is an opportunity to join the U.S.-centered reconfiguration of the semiconductor supply chain on favorable terms, and as advanced-node processes move into a security-and-sovereignty frame, both Korea and Taiwan could become disadvantaged, he noted.