Seoul Calls Attention To Memory As The Biggest AI Chokepoint

South Korea’s government has publicly emphasized that a significant AI memory shortage is imminent, with demand expected to grow by at least 50-60% in 2027, while supply remains stagnant, according to officials from SK Group.

During a press briefing at the Korea Chamber of Commerce and Industry’s Jeju Forum, Chey Tae-won, chairman of SK Group, highlighted that customers are requesting 60 to 100% more AI memory in 2027 than they are acquiring this year. With AI now accounting for over half of all semiconductor consumption, the demand surge is notable.

Chey stated that No company has meaningful new capacity coming online next year, emphasizing a potential supply shortfall. He warned of a complex lobbying environment involving governments treating memory access as a matter of economic security, which could lead to international disputes.

SK hynix has announced plans to accelerate capacity expansion, including moving the Yongin mega-cluster’s first clean room to February 2027 and investing over $14.5 billion in new facilities, but none of this capacity will be operational before 2026, leaving a capacity gap in 2026.

Implications of Memory Shortage for AI and Geopolitics

The warning from Seoul highlights a potential bottleneck in AI development related to the availability of high-bandwidth memory (HBM) and related components. As demand increases, device manufacturers may face rising costs, and nations could engage in geopolitical considerations over access to memory resources, which are increasingly viewed as a matter of economic security.

This situation may influence AI progress, hardware costs, and international relations, especially given the market share concentration of SK hynix, Samsung, and Micron in HBM production.

Memory Market Concentration and Capacity Constraints

The global HBM market is concentrated, with SK hynix holding approximately 58% of revenue in Q1 2026, and Samsung and Micron sharing the remainder. This market structure, combined with limited new capacity, presents ongoing challenges that have been intensifying over the past two years.

While the industry has experienced fluctuations in memory pricing, with high prices affecting device costs, SK hynix’s recent investments aim to address the capacity shortfall. However, these projects are not expected to be operational before 2026, resulting in a capacity gap in the near term.

Additionally, the industry is exploring local inference hardware solutions, which can help mitigate some supply risks but do not fully resolve the fundamental bottleneck in training-scale AI, which remains dependent on HBM availability.

“No company has meaningful new capacity coming online next year.”

— Chey Tae-won, SK Group Chairman

Unconfirmed Aspects of Capacity Expansion and Geopolitical Impact

The timeline for bringing additional capacity online remains uncertain, and the potential for increased geopolitical tensions over memory access as demand grows is still developing. The roles of government intervention and international cooperation are yet to be clarified.

Next Steps in Addressing Memory Shortages and Market Dynamics

Further capacity expansion plans from industry players are anticipated, and government actions regarding memory resource allocation may increase. Monitoring SK hynix’s capacity milestones and international responses will be important for understanding how the market adapts to this situation.

Industry efforts to develop alternative architectures, such as local inference hardware, may help reduce immediate risks, but fundamental capacity constraints are expected to persist into 2027.

Key Questions

What is causing the memory shortage for AI?

The rapid growth in AI demand, especially for high-bandwidth memory like HBM, combined with limited new capacity coming online, is contributing to a supply shortfall.

Why does this matter for AI development?

The shortage could slow AI training and inference, increase hardware costs, and limit the deployment of advanced AI models, affecting innovation and competitiveness.

How might governments respond to this shortage?

Governments may consider measures such as export controls, investments in domestic capacity, or international negotiations over resource access, as part of broader economic security strategies.

Will capacity be enough by 2027?

Current projections suggest that capacity increases before 2027 may be limited, and the shortage could persist unless additional developments occur more rapidly.

Can local inference hardware solve the problem?

Local inference hardware can help reduce reliance on external memory supply for inference tasks, but training-scale AI remains heavily dependent on HBM, so it does not fully resolve the capacity challenge.

Source: ThorstenMeyerAI.com