"Samsung Electronics' (005930.KS) long-cultivated 'one-stop solution' competitiveness has paid off."
"SK hynix (000660.KS) has once again proven its high-bandwidth memory (HBM) capabilities."
These were the industry reactions after Samsung Electronics and SK hynix, the two leaders of Korea's semiconductor industry, simultaneously delivered news of artificial intelligence (AI) semiconductor supply deals to global big tech firms. The combined scale of the HBM and other AI semiconductor and infrastructure cooperation the two companies signed with the U.S. side reaches a total of $950 billion (about 1,390 trillion won). In particular, memory supply contracts, which in the past were limited to one-year terms, have transformed into long-term agreements (LTAs) of five years or more. Analysts say this marks a "structural change," positioning the two companies as core partners in the global AI industry beyond simple memory suppliers.
Samsung Electronics signed a memorandum of understanding (MOU) worth $200 billion (about 290 trillion won) through 2030 with Broadcom, the world's No. 1 custom chip (ASIC) design company, on the 24th, local time. It is assessed as a massive contract mobilizing Samsung Electronics' full semiconductor capabilities, including five years of HBM supply as well as chip production through advanced foundry processes of 2 nanometers (nm, one-billionth of a meter) or below and advanced packaging.
What drew particular attention was Samsung Electronics' "one-stop integrated production (turnkey)" competitiveness. Analysts say that amid the growing adoption of in-house AI accelerators by big tech firms such as Google and Tesla, Samsung Electronics' integrated device manufacturer (IDM) capabilities, equipped with technology across all areas of semiconductor manufacturing, have shone. Broadcom's next-generation AI chips are expected to be mass-produced at the Pyeongtaek campus, Samsung's 2-nanometer cutting-edge foundry production hub.
"In the AI era, semiconductor solutions that tightly integrate memory, logic and advanced packaging are the core competitiveness," said Jun Young-hyun, Vice Chairman and head of Samsung Electronics' Device Solutions (DS) division. "We will expand our cooperation with Broadcom to accelerate the development of future AI infrastructure and provide greater value to customers."
With this order as a turning point, Samsung's foundry business, which had been considered a sore spot after posting quarterly losses in the trillions of won, is also expected to get on track. Analysts say it holds great significance as it has successively secured customers in the cutting-edge 2-nanometer process. After winning Tesla's next-generation 'AI6' chip order last year, Samsung recently signed an MOU with Anthropic for an AI accelerator order, and has now secured Broadcom as a customer for its cutting-edge process.
Broadcom had previously entrusted Samsung with its 8-nanometer mature process, but had consistently entrusted its cutting-edge processes to Taiwan's TSMC, the No. 1 in the foundry industry. With the string of order wins, forecasts are gaining momentum that Samsung's foundry will succeed in turning to profit by 2028.
Samsung Electronics Executive Chairman Jay Y. Lee has been busy working to expand foundry orders. On the 25th, Lee visited OpenAI's headquarters and met with CEO Sam Altman. The two are said to have discussed ways to expand AI semiconductor cooperation, including the latest HBM supply and cutting-edge foundry process orders.
SK hynix, too, living up to its status as a leader in AI memory chips such as HBM, delivered news of LTAs signed with two big tech firms. SK Group signed cooperation worth a total of $750 billion (about 1,100 trillion won) across all areas of AI infrastructure with global big tech firms, including a five-year long-term memory supply with Nvidia.
In particular, the cooperation with Nvidia, estimated at more than $500 billion, includes long-term supply and joint development of next-generation AI memory such as HBM4. The remaining $250 billion is also the result of multiple big tech contracts bundled together, including mid- to long-term cooperation with Microsoft (MS) on memory supply for AI servers.
Requests from big tech CEOs for component supply are pouring in to the extent that SK Group Chairman Chey Tae-won described memory demand as "pandemonium." Dario Amodei, CEO of Anthropic, which has recently emerged as an emerging AI powerhouse, also directly requested component supply from Chairman Chey for manufacturing its own chips.
At the San Francisco AI Summit, where news of the large-scale cooperation between the two companies and big tech was exchanged, a blueprint for the direction Korea's AI industry should take was also discussed. Chey stressed, "We should give each citizen at least one AI agent, making South Korea a testbed where the world can experiment with AI."
Chey continued, "The current AI cost is too expensive," adding, "Korea must build proper AI governance that lowers costs, creates jobs and preserves the environment by producing more memory chips and AI data centers and supplying them to global infrastructure."
