South Korean IT hardware manufacturer SK Hynix will be supplying US$2.6 billion (3 trillion won) worth of semiconductor chips to tech titan Microsoft.
In an agreement signed by both parties, SK Hynix will increase its annual production and supply server DRAMs, NAND-based solid state drives, and systems on chips (SoC) to Microsoft. In turn, Microsoft will provide SK Hynix with cloud services.
The ultimate goal for both companies is to build a cloud-based innovation lab that combines Microsoft’s data processing prowess with SK Hynix’s semiconductor technology.
SK Hynix is currently the world’s third-largest semiconductor chipmaker. South Korea’s largest telecommunications provider, SK Telecom, holds the biggest shares in SK Hynix.
South Korea’s big ambition to lead the global chip market
SK Hynix and Microsoft’s collaboration is in line with the South Korean Government’s new goal to capture 20% of the global AI chip market share by 2030.
The country’s ICT Ministry has set a target to develop and produce up to 50 types of AI-powered semiconductor chips in ten years, investing US$871 million (1 trillion won).
The Ministry plans to acquire homegrown technology and train 3,000 industry experts to develop the chips.
To help AI chip companies in research, development, mergers and acquisitions, US$610,000 (70 billion won) from the local semiconductor fund will be allocated.
The AI chip market is expected to grow rapidly, reaching US$117.9 billion by 2030, compared with $18.5 billion this year, according to the Korea Information Society Development Institute.
SK Hynix and Samsung Electronics currently hold the largest global DRAM chip market share, manufacturing 73.6% of the world’s DRAM chips as of Q2 2020. But the market is expected to decline by 0.5% annually until 2024, according to Gartner.