🧠 Food for thought

Implications, context, and why it matters.

Semiconductor growth backed by government support

• In early 2024, companies sounded upbeat as demand rose for AI memory chips. The government backs this with a plan for what it calls the world’s largest mega semiconductor cluster 1.
• The plan targets KRW 622 trillion in investment by 2047. It funds infrastructure such as underground power cables for new chip plants 1.
• The “K-Chips Act” offers tax deductions up to 25% for facility investment in national strategic technologies. It temporarily boosted the deduction for general research and development (R&D) spending by 10% through December 2024 1.

Chip dominance brings pricing leverage and domestic hurdles

• Exports hit records on High Bandwidth Memory (HBM) for AI. HBM now accounts for about half the production cost of an advanced AI chip 2.
• Korean vendors gained leverage on pricing, with Samsung and SK hynix seeking up to a 70% increase for server dynamic random-access memory (DRAM) 3.
• Downstream products face higher bills, and Samsung has weighed raising prices for its flagship Galaxy S26 smartphone because memory costs jumped 3.
• A local rule on “electric pole regulations” slowed construction. It delayed SK hynix’s semiconductor cluster in Yongin by nearly four years before breaking ground, which could tighten supply for the global AI industry 4.