AI boom revives global chip rivals

Micron Technology's revenue for the third quarter of fiscal 2026, covering March through May, surged 350 percent from a year earlier, while net profit soared 1,400 percent. The U.S. memory chipmaker also expects revenue to climb another 20 percent in the current quarter. Samsung Electronics and SK hynix may be delivering record results, but the United States, the birthplace of the semiconductor industry, is enjoying a boom of its own. Japan, which dominated the global chip industry through the 1980s, is also staging a comeback. Kioxia has posted record earnings for a second straight year, and its stock has soared about 800 percent this year, pushing its market capitalization past Toyota Motor's. The company is also reportedly planning to issue American depositary receipts next year to help finance another round of large-scale investment.

For South Korea's chipmakers, however, that resurgence is hardly welcome. Rivals once thought to have fallen permanently behind have regained both the financial strength and the confidence to challenge the market leaders, propelled by the explosive growth of AI.

Two decades ago, the landscape looked entirely different. Beginning in 2006, the global memory chip market plunged into one of the deepest downturns in its history. Weak demand sent DRAM prices into freefall, leaving manufacturers awash in losses. Earlier shakeouts in the late 1990s and early 2000s had already reduced the field to just seven or eight major players. Another brutal round of consolidation soon followed. Companies slashed prices in an all-out effort to force weaker rivals out of the market, a struggle some compared to hockey players crashing into one another on the ice. Germany's Qimonda eventually collapsed in 2009. Japan's Elpida Memory, then the world's third-largest DRAM producer, followed in 2012 before being acquired by Micron.

Samsung Electronics and SK hynix endured painful losses during that period as well, but the rewards ultimately proved substantial. Together they came to control more than 70 percent of the global memory chip market, a position they continue to hold. Their leadership has not been entirely free of setbacks. A brief downturn struck in late 2022 as oversupply sent DRAM prices tumbling, leaving even Samsung with multibillion-won losses in its semiconductor business. Yet South Korea's dominance never seriously wavered. If anything, the gap separating the country's two memory giants from competitors such as Micron grew even wider. Looking back, each cycle of expansion and contraction only reinforced South Korea's leadership in memory semiconductors.

The AI boom that took hold in the second half of last year, however, has introduced a game-changing variable the industry has never faced before. Prices have surged not only for high-bandwidth memory but also for conventional DRAM and NAND flash, with some products rising more than tenfold in just a year. The boom has generated enormous profits even for second-tier chipmakers. Rivals in the United States, Japan and Taiwan, once regarded as well behind the leaders, now have the financial firepower to launch another round of major investment. In China, where Beijing declared its semiconductor ambitions more than a decade ago, domestic competitors are also beginning to flex their muscles. Samsung and SK hynix still maintain clear advantages in manufacturing scale and advanced process technology. But if their rivals channel these windfall profits into aggressive capacity expansion, the next battle for leadership could be unlike anything the industry has seen in years.

Semiconductors have also become a strategic arena where governments compete as aggressively as corporations. That explains why the United States has used tariffs to encourage domestic chip production while taking a 10 percent stake in Intel. Japan has pursued a similar strategy by backing Rapidus as a national project financed by eight major companies, including Toyota and Sony. With that level of state support behind them, the resurgence of Micron and Kioxia becomes an even more formidable challenge.

What, then, is happening in South Korea? Labor unions are demanding bonuses equal to 10 percent of operating profit, while the labor minister has suggested finding ways to distribute corporate earnings more broadly across society. Even proposals to build new semiconductor plants quickly become political flashpoints. If the country's attention remains fixed on dividing corporate profits instead of reinforcing its long-term competitive edge, South Korea could find itself among the biggest casualties when the industry's next downturn inevitably arrives.