02 JULY 2026 AL CIRCLE

Samsung and SK Hynix: How South Korea came to power two-thirds of the world's memory chips

EDITED BY : ARANYA MONDAL 5MINS READ

The image used in this article is generated with an AI tool and does not depict any real-time moment

Pick up almost any electronic device made over the past five years—a smartphone, an AI server, a laptop or an autonomous-driving computer. Hidden beneath the casing, the memory chips inside are likely to have been manufactured in just three South Korean cities: Hwaseong, Pyeongtaek or Icheon.

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Even more remarkable is that those chips were probably made by only two companies—Samsung Electronics and SK Hynix. Together, they produce roughly two-thirds of the world's memory chips and have a combined market capitalisation of more than USD 700 billion.

That reality would have been almost impossible to imagine in 1953.

South Korea had no semiconductor industry, no precision-manufacturing ecosystem, no advanced engineering workforce and no capital markets capable of supporting such an industry. Three years of war had left its largely agricultural economy devastated. The country, home to around 20 million people, had an adult literacy rate of about 20 percent, while its per-capita income was lower than that of Somalia or Haiti.

Few could have predicted that, within 72 years, South Korean companies would manufacture the memory chips used in Apple's iPhones, Google's Pixel devices, Microsoft's data centres, Nvidia's AI accelerators, Tesla's autonomous-driving computers and countless other digital products sold across the globe.

While silicon is the foundation of every semiconductor chip, aluminium also plays an important role throughout semiconductor manufacturing. Rather than serving as the chip's primary material, aluminium is widely used during fabrication and remains part of many finished devices.

Its high electrical conductivity and ease of etching make it suitable for metal interconnects and on-chip wiring that carry electrical signals. Aluminium is also commonly used in bond pads that create electrical connections during wire bonding and packaging. Beyond the chip itself, aluminium alloys are extensively used in semiconductor fabrication equipment, where their light weight, corrosion resistance and compatibility with vacuum environments make them well suited for processing chambers and other manufacturing systems.

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One investment that changed industry's future

The path to South Korea's semiconductor leadership began on February 8, 1983, when Samsung founder Lee Byung-chul made a decision that many considered too risky.

Despite strong opposition from senior executives, Lee committed approximately USD 400 million from Samsung's reserves to establish a semiconductor business. At the time, Japan dominated the global memory market, while American manufacturers had already lost much of their leadership in memory chips to Japanese competitors. South Korea remained well behind both countries in technological capability.

Lee believed semiconductors would become the essential building blocks of future consumer electronics and that Samsung needed to develop the capability to manufacture them if it wanted to remain relevant. He died of lung cancer in November 1987, four years and ten months after making that decision, before seeing the results of his investment.

Samsung advanced far more quickly than many expected. The company introduced its first commercial 64-kilobit DRAM in December 1983, only about ten months after entering the business. Although the product initially lagged Japanese and American technology, the pace of development surprised industry observers.

Progress continued rapidly. Samsung launched a 1-megabit DRAM in 1986, followed by a 4-megabit DRAM in 1988, a 16-megabit DRAM in 1990 and a 64-megabit DRAM in 1992. The 64-megabit chip reached the market roughly six months before comparable products from Toshiba, NEC and Hitachi.

In the same year, Samsung overtook Toshiba to become the world's largest DRAM manufacturer. By 1993, its DRAM revenue exceeded the combined total of all Japanese semiconductor manufacturers, ending Japan's long-held dominance of the global memory memory market.

Two companies now supply the memory powering AI

Samsung's success was only part of South Korea's rise.

The country's second memory giant began in 1983 as Hyundai Electronics Industries, a subsidiary of the Hyundai Group, whose shipbuilding division had already become the world's largest shipbuilder. During the 1999 Asian financial crisis, Hyundai Electronics merged with LG Group's semiconductor operations, became Hynix Semiconductor in 2001 and was acquired by SK Group in 2012, emerging as today's SK Hynix.

Over the following decade, the company steadily strengthened its position in DRAM and NAND flash memory used in solid-state storage. It evolved from a distant challenger to Samsung into a close competitor and has more recently become the market leader in several high-margin memory segments where Samsung had previously led.

Today, Samsung and SK Hynix collectively shape the global supply of memory technologies that underpin artificial intelligence.

According to SK Hynix's 2026 industry outlook, the global high-bandwidth memory (HBM) market is expected to expand from approximately USD 38 billion in 2025 to about USD 58 billion in 2026, representing annual growth of 53 percent. The increase is being driven primarily by AI infrastructure spending from Nvidia, AMD, Google, Amazon, Microsoft and Meta.

Most of the HBM required to meet that demand will be produced at Samsung's and SK Hynix's fabrication facilities in South Korea, while the remaining supply will come from Micron's U.S. operations.

The scale of investment reflects the industry's strategic importance. Samsung allocated around USD 25 billion in capital expenditure to its memory business in 2025, while SK Hynix committed approximately USD 21 billion. Both companies have announced plans to invest more than USD 30 billion each in 2026.

Their long-term ambitions are equally significant. The Yongin Semiconductor Cluster, a joint industrial development involving both companies, is expected to receive cumulative investment of approximately USD 470 billion by 2050, making it the largest semiconductor manufacturing complex ever planned.