With the global supply of memory chips such as HBM, DRAM, and LPDDR becoming increasingly strained due to the AI revolution, procurement executives from tech giants like Microsoft and Google have been stationed in South Korea to secure production capacity from Samsung and SK Hynix. There are even rumors that Google fired its procurement executive due to a failure to secure supplies. From supply chain battles to personnel reshuffles, the memory chip war is likely to intensify.
Tech giants seek memory supply in South Korea; Microsoft walks out in anger after negotiations fail.
According to a report by South Korean media outlet Maeil Business Newspaper , semiconductor industry insiders revealed that "driven by the explosive demand for AI models, several tech giants have already booked all their memory orders for next year."
In order to secure memory supply contracts with Samsung Electronics and SK Hynix ahead of others, senior executives from the purchasing departments of major technology companies such as Microsoft, Google, and Meta are almost all based in South Korea.
It is understood that there are only three suppliers in the world capable of producing high bandwidth memory (HBM), advanced dynamic random access memory (DRAM), and low power double data rate memory (LPDDR): SK Hynix, Samsung, and Micron.
The report points out that during negotiations for a long-term agreement (LTA) with SK Hynix, Microsoft executives became so angry that they walked out of the meeting when Hynix indicated that it was difficult to meet Microsoft's demands.
Google fires purchasing manager for failing to secure HBM contracts
Google's TPUs, designed for AI computing, rely heavily on HBM, with 60% of their supply coming from Samsung. However, as external customer demand for TPUs exceeded expectations, Google's attempts to place additional orders with SK Hynix and Micron were rejected as "completely impossible."
Google executives even fired the procurement manager directly for failing to sign the LTA in advance, which led to potential supply chain risks and highlighted the personnel risks stemming from the memory shortage.
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From ramping up production capacity to changing personnel strategies: Tech giants are moving their procurement centers from Silicon Valley to Asia.
To strengthen procurement and supply chain management, tech giants are adjusting their talent structure, no longer keeping procurement personnel at their U.S. headquarters, but instead directly stationing them in major semiconductor manufacturing locations such as South Korea, Taiwan, or Singapore.
Google recently publicly recruited a "Global Memory Commodity Manager," and Meta is also seeking a "Global Memory Silicon Sourcing Manager," emphasizing the need for mixed engineering and procurement capabilities to directly connect with Samsung, SK Hynix, and TSMC to compete for production capacity.
Is the memory chip war heating up? Tech giants: We'll buy it as long as it's available.
Faced with massive demand from tech giants like NVIDIA, Microsoft, and Google, South Korean industry insiders revealed that these tech giants have implemented a near-unlimited purchasing strategy.
Currently, major technology companies are placing open-ended orders with the three major memory suppliers, meaning they will accept all orders as long as the supply is available, regardless of price.
He added, "However, Samsung and SK's advanced process production lines, such as HBM, are already operating at full capacity, so it is physically difficult to fully meet their needs."
It's clear that in the current AI supply chain battle, the battlefield has spilled over from GPUs to the HBM field, since no company will relinquish its dominance in the next phase of the AI race.
This article, "From Microsoft to Google: Tech Giants in South Korea Compete for Memory Orders, Threatening to Fire Those Who Can't Get Delivery," first appeared on ABMedia .
