Driving key technologies, intertwined with industries across the world, and an essential part of the AI era—semiconductors are integral to daily life. This fifth episode in the Semiconductor 101 series explores in detail why semiconductors are crucial for shaping modern society. The article also delves into why SK hynix is adapting its approach in the AI era and examines the sweeping influence of the semiconductor industry on the global economy.

Why does the world need semiconductor memory?

Semiconductor memory is indispensable for modern technology, enabling efficient data storage and processing across a variety of devices. To gain a better understanding of semiconductor memory’s importance, let’s picture how its absence would impact some areas of life.

A world without semiconductor memory would be like stepping back in time

Work

Without semiconductor memory, workers would find tasks that once could be finished in a day would take weeks or even months to complete. Computers would be painfully slow and inefficient —making opening and saving files a chore—and offer significantly reduced storage capacity. Multitasking would also be inefficient, with noticeable delays when switching between applications like Word documents and web browsers.

Other essential business applications such as video conferencing, cloud-based software, and messaging tools would be unreliable and costly, hindering collaboration and presenting huge obstacles to remote workers.

Digital Entertainment

People may struggle to fill their evenings and weekends as the entertainment on offer becomes severely limited. Online activities would be time-consuming or almost impossible without semiconductor memory, which enables networking equipment to manage and route data. Social media would be unrecognizable, as users would be unable to instantly share photos and videos. Streaming, gaming, and cloud services would also be unusable without fast and scalable storage solutions. Smartphones would not exist in their current form either, as high-performance and efficient memory is key to the functionality, compact size, and battery life of modern phones.

Banking & Finance

Financial transactions would look very different in a world without semiconductor memory. It would be necessary to make frequent trips to the bank, as app-based transactions would be impossible. This would affect personal finances and the broader economy.

Why is semiconductor memory crucial for the AI era?

In the AI era, semiconductor memory plays a key role in ensuring the smooth operation of AI applications. Today’s AI systems are performing advanced tasks such as image generation and problem solving which require significant data processing capabilities. Moreover, as these AI tools require ever-growing amounts of data to continue their evolution, there is a pressing need to manage this explosion of data. That’s where semiconductor memory comes in.

Semiconductor memory offers several key features which support the smooth operation of AI

High-performance memory is essential for data storage, retrieval, and processing, enabling technologies to keep pace with the rapid rate of data generation. Let’s break down some of the reasons why semiconductor memory is essential in the age of AI.

• Rapid Data Processing: AI systems must rapidly process vast amounts of data to make real-time decisions. Semiconductor memory supports this process by enabling fast data access and storage.
• AI Training Support: AI applications are trained on large datasets to improve their performance. Memory products with high capacity and bandwidth can store and manage these datasets. Moreover, the rapid read/write capabilities of memory solutions can accelerate AI training, making AI systems more efficient.
• Energy Efficiency: AI applications are resource intensive. Semiconductor memory helps reduce power consumption, making them more sustainable. Edge devices¹, such as smart sensors and mobile AI processors, depend on energy-efficient semiconductor memory to perform tasks like real-time image recognition while conserving battery life.

As AI continues to evolve and integrate into various technologies, semiconductor memory remains the key to unlocking its full potential.

Why is HBM an essential product for AI?

Featuring stacked DRAM² chips, High Bandwidth Memory (HBM) is an ultra-fast memory technology which has become crucial in the age of AI. Combining high performance with low-power consumption, HBM can efficiently handle the growing demands of AI systems.

Combining high performance with low-power consumption, HBM is an essential AI memory product

To illustrate some of the benefits of HBM for AI compared to other DRAM products, think of it as an upgraded metro system that reduces passenger wait times at stops. Traditional DRAM chips have a limited number of data paths, akin to station entrances and exits, which are prone to bottlenecks in the data-centric AI era.

Meanwhile, HBM features significantly more data paths which run vertically to support the smooth and rapid passage of data, just like passengers freely passing through a station with numerous entrances and exits. HBM’s ability to minimize delays, or latency, is key in AI systems which need real-time data access to perform tasks such as deep learning.

As touched upon in the previous question, AI systems handle massive datasets and complex computations. HBM supports these tasks by enabling swift and efficient data processing, making it ideal for AI training. For example, SK hynix’s world’s best-performing 12-layer HBM3E offers industry-leading data processing speeds of 1.18 terabytes (TB) per second.

In addition, HBM is optimized for supporting parallel processing in AI systems due to its high bandwidth. As it offers high performance with low-power consumption, HBM also enables AI systems to operate efficiently, particularly in data centers and edge computing devices.

Why does SK hynix need to expand its semiconductor production capacity?

Today, phones instantly recognize faces, autonomous cars cruise down highways, and smart fridges can place orders for food. These developments are largely thanks to technologies such as AI, 5G, and Internet of Things (IoT) devices, which all require high-performance memory products. Moreover, the rapid growth of these and other advanced technologies is further heightening memory demand.

The number of AI users is forecast to grow rapidly, heightening demand for semiconductor memory

Looking at the AI market alone, the number of AI users is projected to grow from almost 255 million in 2023 to around 730 million by 2030³. In response to this changing technological landscape and resultant rising demand for memory, SK hynix is ramping up its production capacity. The company currently operates four production facilities in its home country of South Korea and plans to build two additional domestic facilities in the future, namely:

• The Yongin semiconductor cluster which will boost the company’s production of AI memory
• A fabrication facility (fab) in Cheongju which will produce next-generation DRAM products, including HBM

While it may seem straightforward to simply build new manufacturing facilities to increase production, there are other aspects to consider. For example, there are often challenges associated with commercializing innovations through mass production.

SK hynix is adept in this area, as the company has a long history of transitioning innovations from the R&D stage through to high-volume manufacturing, particularly with DRAM and NAND flash⁴. A recent example of this occurred in March 2024, when the company successfully mass-produced its 8-layer HBM3E through close client collaboration and enhancements in product design.

Why does the semiconductor industry have so much impact on the global economy?

The value of the semiconductor market is greater than the GDP of numerous countries

Semiconductors are essential components in a multitude of electronic devices and are driving technological advancements, making the industry a cornerstone of the global economy. In 2023, the semiconductor market was valued at around 611 billion USD, greater than the GDP of Singapore. However, the full extent of the semiconductor sector’s impact on the global economy can only be understood when looking at some of the industries fueled by these chips.

The consumer electronics market, which is valued at around 950 billion USD, relies heavily on semiconductors. The market’s size is emphasized by the fact that global smartphone subscriptions have surpassed 6.9 billion.

The telecommunications sector, including the expected trillion-dollar 5G market, also depends on semiconductors along with the automotive and healthcare industries. As previously mentioned, semiconductors are also key to advanced technologies such as AI, 5G, and IoT, highlighting their ubiquity in a wide range of high-value technology markets.

While it has been established that the semiconductor sector is a multi-billion-dollar industry which creates immense direct revenue, it also contributes to the economy in other forms. In particular, the sector employs people across the world in roles such as R&D, supply chain management, and manufacturing. By 2030, an estimated 3 million employees will be needed in the sector, highlighting its impact on jobs markets worldwide.

Exploring semiconductor manufacturing in more detail, production is concentrated in East Asian countries such as Taiwan and South Korea. Slowdowns in production which contributed to global chip shortages throughout the years have further highlighted the sector’s strategic importance to numerous industries across the world.

Looking ahead, the semiconductor industry’s impact on the global economy will only continue to grow as the sector itself, and others which rely on chips, expand in the future.

¹Edge: The boundary of a network where data is generated and processed locally on devices or sensors, rather than being transmitted to a centralized data center.
²Dynamic Random-Access Memory (DRAM): A type of short-term computer memory that stores data temporarily while a device is on, losing information when the power is turned off.
³Statista, “Generative artificial intelligence (AI)” report (2024)
⁴NAND Flash: A long-term storage technology that retains data even when the power is off, commonly used in USB drives and memory cards.

The final episode of the Semiconductor 101 series will explore “how” semiconductors are made and provide insights on launching and advancing a career in this dynamic industry.

<Other articles from this series>

[Semiconductor 101] SK hynix’s Guide to Who’s Who in the Semiconductor Industry

[Semiconductor 101] SK hynix Explains “What’s What” in the Semiconductor World

[Semiconductor 101] When Semiconductors & SK hynix Made Their Mark on the World

[Semiconductor 101] “Where” in the World Are Semiconductors Made and Applied? SK hynix Reveals All

The post [Semiconductor 101] “Why” Modern Tech Needs Semiconductors & SK hynix’s Key Contributions first appeared on SK hynix Newsroom.

Much of the semiconductor world remains unseen. The chips themselves are the hidden force behind modern technologies, while few have seen inside the facilities where these advanced devices are painstakingly crafted. To shed light on where semiconductors are made and used, this latest episode of the Semiconductor 101 series takes an inside look into the facilities and regions that produce these chips, as well as the main applications of semiconductors.

Where are semiconductors manufactured?

As shown in the first Semiconductor 101 article, various companies operate facilities which handle different aspects of the semiconductor manufacturing process. While there are a range of these facilities, the following are three of the most common types for each stage of the manufacturing process:

• Wafer manufacturing facility: Companies such as SK siltron, Sumco, and Shin-Etsu Chemical produce silicon wafers that act as the substrate, or foundation, for semiconductor devices. Crucial steps in wafer production take place at these facilities, including purifying the sourced silicon, slicing the purified silicon into thin wafers, and polishing. These wafers undergo further processing steps such as doping¹ to deliver desired features and structures before they are supplied to fabs.
• Fabrication plant (Fab): A fab is a specialized, highly secure facility which manufactures semiconductor devices such as integrated circuits². In other words, fabs handle the front-end semiconductor manufacturing process. They must therefore contain advanced equipment to conduct key processes including oxidation, photolithography, etching, and deposition.
• Assembly and test facility: These facilities are responsible for the back-end manufacturing process, which essentially consists of packaging and testing. While packaging involves protecting the chip from damage and building mechanical and electrical connections, testing ensures a product’s quality and reliability. These facilities are generally run by OSAT³ companies, which receive fabricated wafers from customers and turn them into finished semiconductor products.

Various facilities are responsible for different aspects of the semiconductor manufacturing process

Where in the world are different types of semiconductors designed and manufactured?

The global semiconductor supply chain is spread across various regions that each specialize in one or a few stages of the design and manufacturing process. As a result, semiconductor chips are generally not made in a single location or country, but instead must be shipped across the world to be finished.

In terms of design, which involves defining the product requirements and the physical layout of the individual circuits, the U.S. leads the way—particularly for advanced logic chips. Meanwhile, the latter manufacturing stages are dominated by East Asian countries. As different nations specialize in certain types of chips, let’s look at where three common semiconductor types are manufactured around the world based on a report from the Semiconductor Industry Association (SIA)⁴.

• Memory: Boasting leading semiconductor memory companies including SK hynix, South Korea heads the memory field in terms of production capacity. The nation commands a majority share of DRAM fabrication capacity, well ahead of its nearest rivals. South Korea is also the joint leading producer of NAND flash⁵, alongside Japan, where companies like Kioxia play a major role.
• Logic: Taiwan is the undisputed worldwide leader of logic semiconductor⁶ production thanks largely to the global behemoth of semiconductor fabrication, TSMC. Taiwan holds a 69% share of manufacturing capacity for logic wafers under 10 nanometers (nm), and also leads the way for those measuring between 10 nm and 22 nm. Only China has a bigger market share in logic semiconductors that are larger than 28 nm.
• Discrete, analog, and other (DAO): These chips that serve various applications are manufactured all over the world. While Japan and China produce the most DAO chips with 25% of the market share each, European countries and the U.S. also contribute significantly to the global production of these diverse devices.

Different nations across the world specialize in manufacturing certain semiconductor chips

Where is the largest semiconductor memory market?

With the explosion of data in the AI era, high-performance memory solutions such as DRAM and NAND flash are becoming increasingly critical to store and process this data. This growing importance is reflected in the projected growth of the global semiconductor memory market from an estimated 111.6 billion USD in 2023 to 240.6 billion USD by 2030. Breaking the market down by region, a Precedence Research report reveals the world’s largest semiconductor memory markets in terms of revenue.

In 2023, Asia-Pacific was far and away the leader, commanding around 43% of the market. Coming in second is North America with a 27% share, followed by Europe with a 22% share. Meanwhile, Latin America and Middle East and Africa held a 5% and 2% share of the market, respectively.

Asia-Pacific is home to the largest semiconductor memory market, followed by North America

Where are SK hynix’s semiconductor memory products manufactured in South Korea?

Currently, SK hynix operates four semiconductor memory production facilities in South Korea. To meet heightened demand for memory products, the company is set to boost its domestic manufacturing capacity by constructing additional sites in the future.

Current Sites

SK hynix operates three fabs at its headquarters in Icheon—M10, M14, and M16. The most recent facility is M16, which was built in 2021 to mainly produce DRAM products. In Cheongju, the company runs a fab called M15 which strengthens the company’s NAND flash business.

Future Sites

Scheduled for completion in 2027, the Yongin Semiconductor Cluster will enable SK hynix to boost production of AI memory products. The 4.15 million-square-meter site, the equivalent of around 580 soccer fields, will include four state-of-the-art fabs and a semiconductor cooperation complex. The company will also invest about 5.3 trillion KRW (4 billion USD) for the construction of M15X in Cheongju, enabling it to expand production capacity of next-generation DRAMs including the flagship HBM⁷.

SK hynix operates DRAM and NAND flash memory production sites in South Korea and plans to build an AI memory facility

Where is semiconductor memory applied today?

From the moment you wake up to the morning alarm on your smartphone, semiconductor memory plays a key role in your daily routine. These advanced memory solutions are the foundations for modern technologies which can be found in everyday locations and situations, some examples of which are listed below:

Home

Whether checking social media, playing games, or doing just about anything on your phone, semiconductor memory is required for data storage and ensuring smooth performance. The laptop and smart TV in your home also require internal storage to store and retrieve data, as well as learn usage patterns. Following advancements in on-device AI memory chips, many household appliances now possess customized functions that boost security, speed up processes, and reduce power consumption.

Car/Public Transport

When driving to work, you benefit from memory-backed advanced driver assistance systems (ADAS) such as lane departure warnings, as well as advanced infotainment technology. As you’re stuck at traffic lights, memory is used in the signal’s control systems which store data to manage traffic flow and keep intersections safe. Taking public transport instead? Subways and train control systems require memory to maintain precise schedules and manage train movements on time. Meanwhile, bus tracking and management systems monitor buses and their arrival times at stops.

Hospital

Having your annual health checkup? In hospital, medical imaging devices such as MRI and CT scanners use memory to store images required for diagnosis. Patient monitoring systems, which keep track of data including heart rate and blood pressure, also rely on memory along with electronic health record systems which store patients’ medical history, test results, and doctor notes.

Classroom

As the AI revolution has also impacted education, teachers and students alike can now benefit from a range of AI tools backed by semiconductor memory. For teachers, AI applications can boost productivity in areas such as lesson planning and grading, while students can use such tools for research, writing assistance, and tailored support.

Semiconductor memory is found in many essential technologies used around the world

¹Doping: Process where specific impurities are intentionally added to modify the electrical properties of the silicon.
²Integrated circuit: A collection of components including transistors, resistors, and capacitors grouped on a single board of semiconductor material.
³Outsourced semiconductor assembly and test (OSAT): Vendors that provide third-party semiconductor assembly, test, and packaging (ATP) services.
⁴Source: Statistics for this section are based on wafer production capacity and are from the SIA’s report “Emerging Resilience in the Semiconductor Supply Chain” (May 2024), which uses data from the U.S. Department of Commerce, SEMI, and BCG Analysis.
⁵NAND flash: A non-volatile storage chip that does not require power to retain data.
⁶Logic semiconductor: Semiconductor chips that are known as the “brains” of electronics as they can process information and perform calculations to execute various tasks.
⁷High Bandwidth Memory (HBM): A high-value, high-performance product that revolutionizes data processing speeds by connecting multiple DRAM chips with through-silicon via (TSV).

Having looked at “where” semiconductors are manufactured and used, the next episode will ask “why” these intricate devices are crucial in today’s world.

<Other articles from this series>

[Semiconductor 101] SK hynix’s Guide to Who’s Who in the Semiconductor Industry

[Semiconductor 101] SK hynix Explains “What’s What” in the Semiconductor World

[Semiconductor 101] When Semiconductors & SK hynix Made Their Mark on the World

The post [Semiconductor 101] “Where” in the World Are Semiconductors Made and Applied? SK hynix Reveals All first appeared on SK hynix Newsroom.