Samsung and SK Report a Surge in Chip Requests... Will Five-Year Big Tech Deals Dispel 'Peak-Out' Concerns? [Why&Next]

Announcement of 'San Francisco AI Summit' Investment Plans
Korea’s Global Position Shifts with $950 Billion Cooperation Framework
“Planned Supply Demand, Merely Conceptual Partnerships” – Market Remains Cautious
“Recovery of Investment and Monetization Around 2028 Will Be Key”

With major Korean companies such as Samsung Electronics and SK Group announcing semiconductor cooperation plans with global big tech companies totaling as much as $950 billion (approximately 1,375 trillion won), the semiconductor industry has entered a new phase. However, as the debate over a potential 'peak-out' in the memory semiconductor market continues, some remain skeptical, suggesting these may merely reflect already planned memory supply demands. Additionally, since these collaborations are at the conceptual stage—rather than confirmed orders—and form part of the government's "three mega projects," there is caution over whether the cooperation will materialize.

According to industry sources on July 27, Samsung Electronics signed a memorandum of understanding (MOU) with Broadcom in San Francisco, United States, on July 24 (local time), aiming to pursue cooperation worth more than $200 billion (292 trillion won) over the next five years in the fields of memory, foundry, and advanced packaging by 2030. Samsung Electronics will supply Broadcom's next-generation AI accelerators with memory products, including high bandwidth memory (HBM), and plans to produce and provide next-generation communication semiconductor solutions in sub-2-nanometer processes (1nm = 1 billionth of a meter).

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SK Group signed a letter of intent (LOI) with Nvidia for comprehensive AI cooperation amounting to more than $500 billion. SK hynix will supply and jointly develop next-generation AI memory with Nvidia over the long term, while SK Telecom will procure next-generation graphic processing units (GPUs) and pursue investment cooperation for the construction of a domestic AI factory with a capacity of up to 2 gigawatts (GW)—the largest in Korea. The total scale of cooperation with big tech companies reaches $750 billion (1,085 trillion won).

This announcement has led to assessments that Korean semiconductor companies have entered a full-fledged "second act." The roles of companies such as Samsung Electronics and SK hynix are expanding from being mere semiconductor manufacturers and component suppliers to core partners participating in the design and construction of AI infrastructure. Samsung Electronics is offering a "one-stop solution," providing memory, foundry, and advanced packaging all at once, and SK Group is broadening its cooperation range by integrating HBM supply with AI data center construction and telecommunications.

However, a wait-and-see approach persists within the industry and the market. Amid concerns about overinvestment in big tech infrastructure and the possibility that semiconductor prices have peaked, some analysts suggest that these announcements may just confirm already contracted supply demand. In fact, SK Group Chairman Chey Tae-won explained, "We are here today not to make a reckless announcement, but to say this is actually quite realistic."

It is also noted that, even as the government announces successive large-scale investment plans following the three mega projects, concrete contract volumes have not been disclosed. The total investment for the government-announced plan for the Honam region is 4,755 trillion won, with 800 trillion won allocated solely for semiconductor investments by Samsung Electronics and SK hynix. Although the government has designated Gwangju Military Airport as the site for a new semiconductor cluster, all detailed plans—ranging from the start and operation schedules to the construction of basic infrastructure such as power and water, as well as region-specific investment plans—still need to be clarified.

Similarly, the San Francisco investment announcements reveal future investment intentions between the companies, but it remains unclear whether these constitute definitive supply contracts that guarantee minimum product quantities and prices. The Samsung Electronics and Broadcom agreement is at the MOU stage, and the SK Group and Nvidia partnership is at the LOI stage. The actual scale of transactions may change depending on the pace of AI infrastructure investment and demand expansion, as well as the content of future signed contracts.

The market also perceives that even if AI investment continues to rise in the long term, sustaining the current memory prices and profitability is a separate issue. While Samsung Electronics and SK hynix are expanding production capacity on a large scale, Chinese memory companies are also rapidly increasing their facilities. There are concerns that if AI investment growth slows or new production facilities operate simultaneously, it could lead to oversupply. Against this backdrop, as second-quarter earnings releases for Samsung Electronics, SK hynix, and global big tech companies begin this week, there is expected to be keen attention on prospects for memory supply and the pace of capacity expansion moving into next year.

Yongseok Kim, Distinguished Professor at the Semiconductor College of Gachon University, commented, "This announcement is more of a recap of already known cooperation plans rather than something truly new." He added, "What matters is whether the announced plans actually lead to investments and orders." He went on to say, "This is a period that unavoidably calls for increasing investments, which naturally brings uncertainty," suggesting that "around 2028, there will be full-scale evaluation of whether AI service companies can actually recoup their investments and whether hyperscalers have established sustainable profit models."

This content was produced with the assistance of AI translation services.