Why is AI making computers and games consoles more expensive? The latest commodity coveted by the AI industry is computer memory, and the sector is signing deals directly with manufacturers for billions of dollars worth of chips - the very same chips that consumers use in smartphones, laptops and games consoles. At best, this is driving up prices, and at worst, it is causing shortages that limit production. Why does AI need so much memory? AI models are very, very big.

South Korea's top trade envoy Yeo Han-koo said Thursday that Samsung Electronics and SK Hynix will not be subject to 100% U.S. tariffs on chips. Yeo said on radio that among various countries, South Korea will face the most favorable U.S. tariff rates on chips under the trade deal between Washington and Seoul. U.S. President Donald Trump said Wednesday the United States will impose a tariff of about 100% on semiconductors imported from countries not producing in the U.S. or planning to do so. But it would not apply to companies that had made a commitment to manufacture in the U.S. or were in the process of doing so. Trump's comments were not a formal announcement and much remains unclear.

Samsung Electronics plans to use a chipmaking technology championed by rival SK Hynix, five people have said, as the world's top memory chipmaker seeks to catch up in the race to produce high-end chips used to power artificial intelligence. The demand for high bandwidth memory (HBM) chips has boomed with the growing popularity of generative AI. But Samsung, unlike peers SK Hynix and Micron Technology, has been conspicuous by its absence in any dealmaking with Nvidia to supply the AI chip leader with the latest HBM chips. One of the reasons Samsung has fallen behind is its decision to stick with chipmaking technology called nonconductive film (NCF), which causes some production issues, while Hynix switched to the mass reflow molded underfill (MR-MUF) method to address NCF's weaknesses, according to analysts and industry watchers.

The industry ministry said on Tuesday it would extend subsidies worth as much as 242.9 billion ( 1.64 billion) for Bain Capital-backed Kioxia and Western Digital to expand memory chip production in Mie and Iwate prefectures. The funding provides underpinning for the two companies, which have been hammered by a slump in the market for NAND flash chips and whose merger talks stalled late last year following opposition from Kioxia investor SK Hynix. Japan's powerful industry ministry aims to reclaim the country's lost position as a major chip center by extending subsidies to domestic and foreign chipmakers and secure chip supply amid trade tensions between China and the United States. "The memory market is expected to grow significantly in the future, including for generative AI (artificial intelligence)," industry minister Ken Saito told reporters. "The joint investment by Kioxia and Western Digital brings together Japan and the U.S. to fulfill our responsibility to supply the memory the world needs," he said.

South Korea's SK Hynix aims to select a US site for its advanced chip packaging plant and break ground there around the first quarter of next year, two people familiar with the matter said, helping the United States to compete as China pours money into the burgeoning sector. The plant, whose estimated cost would be "several billions", would ramp up to mass production by 2025-26 and employ about 1,000 workers, one of the sources said, declining to be named because details about the plant have not been made public. It would likely be located near a university with engineering talent, the person said. The company is "hoping to make a selection of the site and break ground somewhere around the first quarter of next year", one of the people said. SK Group, South Korea's second-biggest conglomerate, owns memory chipmaker SK Hynix and announced the new plant last month as part of a $22bn US-based investment package in semiconductors, green energy and bioscience projects.

SK Telecom (SKT) today unveiled its self-developed artificial intelligence (AI) chip named'SAPEON X220' and shared its AI semiconductor business vision. SAPEON X220 is optimally designed to process artificial intelligence tasks faster, using less power by efficiently processing large amounts of data in parallel. Its deep learning computation speed is 6.7 kilo-frames per second, which is 1.5 times faster than that of Graphics Processing Units (GPUs) for inference that are being widely used by AI-service companies. At the same time, it uses 20% less power than GPU by consuming 60 watts of energy and is about half the price of a GPU. SKT explained that SAPEON X220 will enable the provision of high-quality AI services by enhancing the performance of AI data centers through speedy computation of massive amounts of data.

The acquisition includes the Nand SSD business, the Nand component and wafer business, and the Dalian Nand memory manufacturing facility in China. Intel will however keep its distinct Intel Optane business. The companies hope to close the deal after receiving all of the necessary governmental approvals in late 2021. Under the agreement, SK hynix will first acquire the Nand SSD business (including NAND SSD-associated IP and employees), and the Dalian facility, with a first payment of USD 7 billion. SK hynix will acquire the remaining assets, including IP related to the manufacture and design of Nand flash wafers, R&D employees, and the Dalian fab workforce, upon final closing sometime in March 2025 with the remaining payment of USD 2 billion.

The fundraising round was led by South Korean chip maker SK Hynix Inc and several "first-tier" Chinese automakers, while other participants included China Oceanwide Capital, Citic Securities' One-Belt-One-Road Fund, and Minsheng Capital, Horizon said in a statement on its website.