Japan is set to invest $65 billion (10 trillion yen) in microchips and artificial intelligence (AI) as part of a strategic initiative to regain its status as a global technology leader. This investment package is expected to be approved by lawmakers this week and aims to address challenges posed by an aging population and rising geopolitical tensions, particularly concerning Taiwan. Analysts have raised concerns about potential worker shortages and energy supply issues for AI data centers as Japan ramps up its technological ambitions. [2041f3c7]
In a collaborative effort, SoftBank and Nvidia are working on an 'AI grid' to enhance AI capabilities in the country. Additionally, Japan's Rapidus project will receive government support to boost semiconductor production, which is vital for the country's tech industry. The recent opening of an $8.6 billion factory by TSMC in Japan further underscores the country's commitment to strengthening its semiconductor manufacturing capabilities. [2041f3c7]
As the U.S. also increases its investments in chip manufacturing, Japan is striving to improve its digital competitiveness, where it currently ranks 31st globally. Prime Minister Shigeru Ishiba has set an ambitious target of over 50 trillion yen in investments for AI and chips over the next decade, signaling Japan's determination to enhance its technological infrastructure and capabilities. [2041f3c7]
Meanwhile, hedge funds are increasingly looking at South Korean chipmakers, including SK Hynix and Samsung Electronics, to gain exposure to the AI sector. These hedge funds believe that the recent AI frenzy has left behind stocks like Hynix relative to other Asian AI players. South Korean chipmakers are in focus as technology firms race to secure high-bandwidth memory (HBM) chips, primarily manufactured by Hynix, Samsung, and Micron Technology. The South Korean government's support package for the chip industry and its new 'Corporate Value-up Programme' are also contributing to the interest in South Korean AI stocks. The rush of hedge fund cash into South Korea's AI sector has helped the benchmark index register its best month in seven months in June. [23fff3e6]
SK Hynix has reported quarterly revenue of 16.4 trillion won ($11.9 billion), more than double the previous quarter, driven by increased demand for AI hardware. The company's high-bandwidth memory (HBM) sales surged over 250%. Operating profit for the quarter was 5.47 trillion won with an operating margin of 33%. SK Hynix plans to mass produce its next-generation 12-layer HBM3E chips this quarter, giving it a lead over rivals Samsung and Micron in supplying high-end memory for Nvidia's AI accelerators. [ce17e41a]
In another development, SGH (SMART Global Holdings) has announced a $200 million strategic investment from SK Telecom (SKT) to enhance SGH's capabilities in AI and to innovate on strategic collaborative opportunities. The investment is expected to close by the end of 2024. [1b289b9b]