Korean Export Star 'Server DRAM' Faces Domino Impact?

US Urges Nvidia and AMD to "Halt AI Semiconductor Exports to China"
Data Center-Focused Server DRAM Demand Expected to Decline
Concerns Over Chip Price Drops

Researchers are supporting performance evaluation for semiconductor material product development in the 12-inch semiconductor testbed cleanroom at the Daejeon Nano Convergence Technology Institute. It is forecasted that the global semiconductor shortage will continue until mid-next year. As the local industry in the region, which is pursuing a strategy to advance the semiconductor ecosystem, faces potential impacts from this trend, attention is focused on the responses emerging from countries around the world. Our government is also accelerating the advancement of the semiconductor ecosystem. Through the 'K-Semiconductor Strategic Report,' the government envisions a leap to becoming a comprehensive semiconductor powerhouse by 2030 and plans to complete semiconductor localization through massive investments and tax benefits. Having achieved K-quarantine during COVID-19, South Korea is expected to proudly demonstrate the success of K-semiconductors in the global semiconductor supremacy competition. Photo by Kang Jin-hyung, Daejeon.

[Asia Economy Reporter Han Ye-ju] Domestic semiconductor companies are on edge as the U.S. government halts exports of cutting-edge semiconductors for artificial intelligence (AI) produced by American firms to China. The export ban targets products belonging to the data center business sector, which could reduce demand for server DRAM used in infrastructure. Server DRAM has been a key product driving the semiconductor performance of Samsung Electronics and SK Hynix, raising concerns that this could negatively impact domestic companies.

According to industry sources on the 8th, Nvidia, a major U.S. semiconductor company, recently announced that it received new licensing regulations from the U.S. government restricting exports of advanced semiconductors used for AI to China. The export ban applies to AI semiconductors such as the A100 and H100 GPUs (graphics processing units).

Going forward, Nvidia will be prohibited from exporting any semiconductors with performance equal to or exceeding the A100, as well as systems containing these semiconductors. Similarly, AMD, another U.S. semiconductor company, announced that exports of its AI GPU semiconductor M1250 to China will be halted under the same regulations.

The issue is that Nvidia’s A100 and H100 belong to the data center business sector. A data center is a facility that houses and manages equipment necessary for providing IT services within a single building. The foundation for data usage and processing is memory semiconductors. Currently, it is known that a typical data center requires about 20 million GB of DRAM.

An industry official said, "If Chinese data center companies cannot secure products from Nvidia, the leading GPU company, server investments will inevitably shrink," adding, "For domestic companies that had been increasing investments expecting growth in Chinese data center investments, it may be difficult to avoid the ripple effects on server DRAM demand."

Currently, server DRAM accounts for about 40% of the total DRAM sales of Samsung Electronics and SK Hynix. It is considered a cash cow (core profit source) due to its high added value compared to other products.

Competition to capture the market for server DRAM growth prospects is fierce. For example, Samsung Electronics recently became the first in the industry to develop 512GB CXL DRAM. CXL is a new interface designed to efficiently utilize accelerators, memory, and storage devices used alongside CPUs (central processing units) in high-performance computing systems. SK Hynix is also responding to demand by increasing the proportion of high-value-added product shipments. In October last year, it developed the industry's first HBM3 DRAM. HBM is a product that vertically stacks multiple DRAM chips to increase data processing speed compared to conventional DRAM.

Industry insiders predict that if memory semiconductor demand shrinks and server DRAM demand is also hit, chip prices themselves could fall. Another industry official pointed out, "As the economic downturn continues for a prolonged period, we are also detecting reductions in investment plans by major data center companies," adding, "The dual challenges of demand slowdown and inventory adjustments could proceed more extensively in memory than expected."

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