Taiwan and South Korea strengthen control over the production of key AI chips and memory
TSMC in Taiwan controls the production of the most advanced AI chips; according to the government there, the most advanced production is to remain on the island. South Korea is investing about 600 billion USD with Samsung and SK Hynix in new plants - the two companies hold around 80 % of the market for memory used in AI chips.
TSMC in Taiwan controls the production of the most advanced semiconductors on which the most cutting-edge AI systems depend, including AI processors. According to the article, Taiwanese Foreign Minister Francois Chih-chung Wu confirmed in late 2025 that the most advanced manufacturing capacity must remain in Taiwan - although TSMC also operates plants in Germany, Japan and the USA, it keeps its most advanced production exclusively at home.
South Korea is taking a similar approach. The government there, together with Samsung and SK Hynix, announced an investment of roughly 600 billion USD in two new manufacturing plants in the southwest of the country. Samsung and SK Hynix together control about 80 percent of the global market for high-speed memory (high-bandwidth memory), which AI processors need to train and run models. Nvidia CEO Jensen Huang met with the leadership of SK Hynix, LG and Naver during a visit to Asia and said that South Korea has the infrastructure to become a global leader in AI. According to the article, Anthropic is working with Samsung to develop a new AI chip.
The article points out that this success also has social costs - a sharp rise in the value of chip companies in both Taiwan and South Korea pushed their stock markets to new highs, followed by a rapid decline, fueling concerns about growing wealth inequality and market volatility. The authors of the article conclude that the goal of these countries is not complete self-sufficiency across the entire AI supply chain, but specialization in key components that are difficult to replace - the production of advanced chips and memory - which allows them to maintain strategic influence alongside American companies such as Nvidia.
Why it matters
Companies such as Nvidia, Anthropic and other customers of the semiconductor industry depend on two geographically concentrated supply hubs - advanced processor production in Taiwan and high-speed memory production in South Korea. Concentration in these two countries means that any disruption to production (geopolitical, natural or market-related) could affect the entire global AI hardware supply chain, while also giving TSMC, Samsung and SK Hynix a strong bargaining position with the rest of the industry.
Two audiences, two different impacts
What this means
For individuals
According to the article, a sharp rise in the value of chip companies in Taiwan and South Korea was followed by a rapid decline, indicating increased volatility in investments linked to AI hardware.
For a business
Companies that depend on AI chips face a situation in which key production of both advanced processors and memory chips is concentrated in Taiwan and South Korea - this increases the risk of supply disruptions and strengthens the bargaining position of TSMC, Samsung and SK Hynix with customers such as Nvidia or Anthropic.
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