South Korea wants to be a top A.I. hub — its memory chip dominance could be an advantage

South Korea's dominance successful the representation spot marketplace and a robust artificial quality ecosystem gives it an vantage successful the planetary AI spot race, said manufacture observers.

"South Korea is precise beardown successful representation chips. AI does necessitate a batch of memory. South Korea dominating successful the representation marketplace is decidedly an advantage," said James Lim, elder probe expert at Dalton Investments.

South Korea is aiming to go 1 of the world's apical 3 AI powerhouses by 2027, pursuing intimately down the U.S. and China, according to the nation's "digital strategy."

The country's curate for subject and accusation and communications technology, Jong-ho Lee, told CNBC the state "aims to support its starring presumption successful the representation semiconductor field."

"South Korea seeks to look arsenic a salient subordinate successful rapidly increasing and promising areas specified arsenic AI semiconductors," said Lee.

Large connection models specified arsenic ChatGPT — which caused planetary AI adoption to detonate successful caller months — are progressively successful request of high-performance memory chips. Such chips alteration generative AI models to retrieve details from past conversations and idiosyncratic preferences successful bid to make humanlike responses.

Generative AI is simply a benignant of artificial intelligence that tin make contented specified arsenic text, images, codification and more.

"In bid for the usage of AI, including ultra-large connection models, a important fig of semiconductor chips are required to operate, and planetary companies are competing fiercely to make high-performance and low-power AI semiconductors optimized for AI computation," Lee said.

South Korean firms Samsung Electronics and SK Hynix are 2 of the world's largest dynamic random-access representation chipmakers and person been actively investing successful AI probe and improvement to bolster their capabilities.

Samsung successful March said that it plans to put 300 trillion Korean won ($228 billion) successful a new semiconductor installation successful South Korea.

Samsung is "spending and spending and spending," Dylan Patel of probe and consulting steadfast SemiAnalysis told CNBC past month. "And wherefore is that? So they tin drawback up connected technology, truthful they tin proceed to support their enactment position."

Data from probe steadfast TrendForce showed that Samsung held a marketplace stock of 40.7% and SK Hynix held 28.8% successful the aforesaid play successful the 4th fourth of 2022, followed by Micron successful 3rd spot astatine 26.4%. Memory chips are besides utilized successful computers, smartphones and tablets arsenic retention devices.

"South Korea has a robust section AI ecosystem, susceptible of competing with planetary tech giants," said Sung Nako, enforcement for ample standard AI improvement astatine South Korean net elephantine Naver.

ChatGPT shaper OpenAI's CEO Sam Altman had urged South Korea to pb AI spot production during his gathering with South Korean President Yoon Suk-yeol successful June. Altman also expressed involvement successful investing successful South Korean startups and partnering with major chipmakers similar Samsung Electronics.

"U.S. spot giants Nvidia, Intel — they are not progressive successful the representation business. They don't person immoderate vulnerability successful the representation space," said Dalton's Lim, adding that this would springiness South Korea an advantage.

Samsung is the supplier of precocious bandwidth representation chips to Nvidia, which acceptable into the U.S. chipmaker's latest A100 graphics processing units that bid ChatGPT.

Geoffrey Cain, writer of the 2020 publication "Samsung Rising," told CNBC past period that helium sees Samsung "diving deeper into the logic spot segment. So, [that's] the AI chips, the aboriginal applications for semiconductor technology."

The South Korean authorities is investing heavy successful AI.

In 2022, the MSIT said it volition beryllium deploying 1.02 trillion won ($786 million) of backing for AI semiconductor probe and development implicit the adjacent 5 years.

"AI not lone drives the maturation of integer industries specified arsenic unreality computing and metaverse but besides serves arsenic a cardinal origin successful dramatically improving productivity successful accepted industries specified arsenic manufacturing and logistics," Lee told CNBC.

"With AI being applied crossed assorted domains, adjacent greater economical ripple effects tin present beryllium anticipated," helium said.

South Korea volition besides allocate 826.2 cardinal won done 2030 to physique high-end chips done caller information centers and moving with startups.

In a property merchandise past month, the curate said that "the economical and concern worth of AI semiconductor volition proceed to amended and Korea has the precocious manus successful the representation spot [sector] and foundry."

"We volition spare nary effort to assistance Korea unafraid world-class AI semiconductor exertion by leveraging our representation semiconductor capabilities to beforehand AI semiconductors successful stages by 2030, processing further to use them to information centers, and fostering AI semiconductor experts," helium said successful the release.

In a bid to situation to U.S. spot giants, South Korean AI spot plan startup Rebellions claimed its caller spot surpassed show standards, outperforming Nvidia's equivalent GPUs by much than 3 times.

"In presumption of AI workload, we person overmuch amended vigor efficiency, outgo ratio ... sometimes amended performance," Rebellions co-founder and CEO Park Sung-hyun told CNBC successful May.

Rebellions is reportedly racing to triumph authorities contracts arsenic Seoul aims to bolster its section companies.

"I spot a batch of — acknowledgment to OpenAI's ChatGPT — founders starting companies successful the region, and besides a batch of investors, with the enactment from the government, showing a precocious involvement successful backing these startups," said JP Lee, CEO and managing spouse astatine SoftBank Ventures Asia, connected CNBC's "Street Signs Asia."

— CNBC's Katie Tarasov contributed to this report.