As demands grow in the United States for reduced power consumption and environmental impact from data centers, analysts suggest that the value of low-power semiconductor technologies developed by Samsung Electronics and SK Hynix may increase. With constraints on power supply, there will be a greater need for high-efficiency memory and advanced processes to perform more AI computations with the same energy.
Experts argue that the market's perception of a slowdown in semiconductor demand due to a decline in data center construction needs to be nuanced. If the core issues of regulations and community opposition stem not from AI services themselves but from the burden on the power grid, rising electricity costs, and environmental expenses, then semiconductor technologies that alleviate these concerns could be part of the solution.
According to semiconductor industry insiders and experts on November 9, discussions around data center regulations in the U.S. present both risks of reduced investment for Korean semiconductor firms and opportunities in the competition for energy efficiency. The key will be whether Korean companies can connect their long-standing investments in low-power memory, heat management, and advanced process technologies to cost savings and performance improvements for their clients.
Lee Jong-hwan, a professor at Sangmyung University’s Department of System Semiconductor, stated, “Korea should not only focus on the scale of data center construction in the U.S. but also examine where actual AI infrastructure investments are moving and what semiconductor technologies are required.”
As Power Restrictions Increase, the Value of High-Efficiency Semiconductors Grows
Following the Democratic Party's acquisition of a majority in both houses of Congress during the U.S. midterm elections on November 3, concerns have spread in the market about potential tightening of data center regulations. There are predictions that political responses to community opposition, which argues that large facilities strain local power grids and increase household electricity costs, could delay new construction.
The domestic stock market interpreted this as a potential slowdown in AI investment and memory demand. On November 6, the KOSPI index fell 6.02% to close at 5,059.69, with both Samsung Electronics and SK Hynix experiencing declines.
However, policies aimed at curbing power usage in data centers do not uniformly affect all semiconductor demand. While orders for equipment in new facilities may be delayed, investments aimed at increasing processing capabilities without significantly raising power consumption in existing facilities may continue.
Lee emphasized the need to monitor the scale of data center construction by U.S. tech giants and their GPU purchasing plans separately, noting that even if data center construction is delayed, the demand for equipment replacement in existing facilities may persist.
In this scenario, the criteria that clients prioritize will also change. Factors such as maximum processing speed and capacity of semiconductors, as well as performance achievable within given power limits, heat generation, and cooling burdens will become increasingly important. The greater the power constraints, the stronger the economic incentive to replace with high-efficiency products.
Lee pointed out that “not only the performance of HBM but also the need for technology development to enhance performance per watt, heat generation, and packaging efficiency is crucial,” adding that as power constraints in data centers increase, energy efficiency at the system level becomes an important competitive factor.
Long-Term Investments in Low Power Linked to Client Cost Savings
Samsung Electronics and SK Hynix have accumulated technologies that enhance memory speed and capacity while reducing power consumption and heat generation. They are presenting power efficiency improvements as a key achievement in next-generation high-bandwidth memory (HBM).
SK Hynix announced that it has doubled the memory bandwidth of HBM4 compared to its predecessor and improved power efficiency by 40%. The subsequent HBM4E model reportedly enhances power efficiency by over 20% compared to the previous version.
Samsung Electronics has applied low-voltage through-silicon via (TSV) technology and optimized power distribution in HBM4, achieving approximately a 40% improvement in power efficiency compared to HBM3E. The next-generation HBM4E is said to further increase energy efficiency by an additional 16% compared to its predecessor.
Since these figures are comparisons with each company's previous generation products, direct judgments about superiority among companies cannot be made. Moreover, improvements in product efficiency do not necessarily translate to a proportional reduction in overall power consumption for data centers. However, the technology that helps clients perform more computations within power limits is emerging as a key aspect of the HBM competition.
Lee analyzed that these low-power, high-performance technologies could serve as differentiators for Korean companies against competitors like Chinese memory firms and U.S.-based Micron.
The benefits for Korean companies will depend on the overall scale of data center investments, as well as the proportion of high-efficiency products within that and the market share of Korean firms.
Samsung's Opportunities Extend to Foundry Services
Samsung Electronics has the potential to broaden its opportunities by holding both memory and foundry businesses.
As global tech giants expand their development of proprietary AI accelerators, the power efficiency of customized semiconductors optimized for specific tasks may become increasingly important. Analysts suggest that if Samsung participates in the production of these chips based on advanced processes and low-power design technologies, it could secure new order opportunities beyond memory supply.
A Samsung Electronics representative stated, “Demand for advanced processes is determined by various factors, including power efficiency, chip size, integration, and performance,” adding that as the demand for next-generation semiconductors rises, the importance of fine processes is expected to grow.
Existing long-term supply agreements (LTAs) are expected to mitigate short-term shocks while responding to these demand changes.
SK Hynix announced last month that it had signed LTAs with 14 major clients, securing supply volumes that correspond to over 50% of its production capacity for 2027-2028.
An SK Hynix representative noted, “While we can adjust contract volumes or delivery schedules to some extent depending on market conditions, we have a structure that ensures sales stability by securing a certain level of volume,” adding that safety measures to support contract fulfillment are also in place.
A Samsung Electronics representative also mentioned, “It will take time for related regulations to have a real impact,” and predicted that as memory supply expands through recent long-term contracts, the likelihood of immediate shocks to demand or sales from short-term political variables is low.
Of course, long-term contracts do not guarantee all volumes and prices. If new data center investments remain subdued for an extended period, it could burden subsequent orders and expansion plans.
Nevertheless, the movement to reduce power and environmental burdens could serve as a test of the marketability of technologies that the Korean semiconductor industry has long prepared. The next battleground for Samsung Electronics and SK Hynix is expanding from supplying chips for AI infrastructure that consumes more power to implementing AI infrastructure that delivers greater performance within limited power constraints.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.