South Korea becomes the AI industry's key supplier

Photo: Jeremy Waterhouse · Pexels

This week South Korea has been the stage for a series of announcements that confirm where AI investment is heading: not just toward whoever designs the most powerful chips, but toward whoever manufactures the memory that feeds them. Samsung Electronics and SK Hynix have closed supply deals with major U.S. tech companies, while Nvidia secured part of its memory supply chain through a partnership with SK Hynix.

The focus is on memory, not just the processor. For years the conversation around AI centered on who makes the fastest chips. Now, with demand surging, the ability to produce high-performance memory has become a bottleneck as critical as the processor itself. That is why Nvidia has chosen to lock in access to this component through direct deals with SK Hynix, and why Samsung has also entered similar partnerships, including one with Broadcom to strengthen its foundry business.

Doubts about whether the cycle has peaked

Not everything is certain. Concerns are circulating in the sector about whether the current memory demand cycle might be nearing a peak, after several quarters of intense growth. Analyst firms like Citi have pushed back on this fear, keeping their positive ratings on Samsung and SK Hynix despite these signs of caution.

What these deals make clear is that big tech companies are willing to commit long-term capital to secure critical component supply, in a context where memory scarcity could become the next bottleneck in the race for artificial intelligence.