AI Supply Chain Pivot: $700B Shift Prioritizes Memory Over GPUs

Woofun AI reports that the AI supply chain is undergoing a fundamental structural pivot, moving away from the previous scarcity-driven focus on GPUs toward the critical security of memory and advanced packaging resources. This strategic realignment is evidenced by massive capital commitments from industry leaders, signaling that the bottleneck for next-generation AI infrastructure is no longer computational processing power alone, but the underlying memory hierarchy and interconnect technologies required to support it. The narrative has shifted from acquiring chips to locking in the foundational components that enable those chips to function at scale, a transition that redefines competitive advantage in the semiconductor sector.

The catalyst for this shift was announced on July 24, when SK Group revealed an expansion of its comprehensive partnership with NVIDIA during the AI Summit in San Francisco. The total scale of this collaboration exceeds $500 billion, a figure that encompasses not just component supply but the construction of entire AI factories and the development of next-generation memory solutions. This agreement integrates SK hynix, the world’s leading memory manufacturer, with SK Telecom, a major telecommunications provider, creating a vertically integrated ecosystem designed to support NVIDIA’s computing infrastructure. The scope of the deal extends beyond simple procurement, establishing a long-term framework that binds the two conglomerates together in the race to build the physical backbone of artificial intelligence.

Simultaneously, Samsung Electronics signed a Memorandum of Understanding (MOU) with Broadcom, outlining a cooperation scale expected to exceed $200 billion in the memory and foundry fields from 2025 to 2030. This agreement is distinct in its technical specificity, covering memory supplies, foundry services, and advanced integration technologies. The timeline spans five years, indicating a long-term strategic alignment rather than a short-term transactional arrangement. The MOU includes provisions for High Bandwidth Memory (HBM), 2nm process technology, and 2.3D/2.5D integration, areas that are becoming increasingly critical for the performance of AI accelerators. This partnership positions Samsung as a key player in the supply chain for Broadcom’s next-generation AI chips, challenging the existing dominance of other foundry providers.

Bernstein’s report, published on July 27, emphasizes that the significance of these deals lies not in the volume of chip orders, but in the securing of memory and packaging capabilities. The analysis argues that AI servers cannot rely solely on GPU expansion; for GPUs, ASICs, and other computing chips to effectively enter data centers, they require a robust supply of HBM, DRAM, NAND, and advanced packaging solutions. If these supporting components cannot keep pace with computational demand, shipments from major AI chip companies like NVIDIA and Broadcom may face significant delays. The report highlights that memory and packaging are now the limiting factors in system delivery, making them more valuable than the compute chips themselves in the current market context.

A detailed breakdown of the SK-NVIDIA deal reveals that the $500 billion figure is not a single memory procurement contract but a comprehensive partnership involving multiple entities within the SK Group. SK hynix is responsible for the supply of HBM4 and next-generation memory technologies, while SK Telecom serves as the main entity for the construction and operation of AI factories. The collaboration includes the deployment of up to 2GW of AI factory capacity, the integration of NVIDIA’s DSX and Vera Rubin platforms, and the supply of SK hynix’s HBM4. The first AI factory under this agreement is scheduled to go live in 2027, marking a significant milestone in the physical infrastructure of AI. This integrated approach ensures that memory supply is synchronized with compute infrastructure, reducing the risk of bottlenecks in system deployment.

Woofun AI data shows that the Samsung-Broadcom MOU is structured as a comprehensive supply chain solution, offering an alternative to the traditional reliance on TSMC for advanced packaging and foundry services. Samsung has stated that the cooperation over the next five years, until 2030, will exceed $200 billion, including memory and foundry support for Broadcom’s next-generation AI accelerators. The agreement involves advanced packaging related to the 2nm process, specifically 2.3D and 2.5D integration technologies. Samsung’s Cube-S and Cube-E/R packaging solutions, which belong to the 2.5D/2.3D Cube packaging category, are being positioned as direct competitors to TSMC’s CoWoS-S/L/R technologies. The core aim of these packaging solutions is to address high-bandwidth connections between logic chips and HBM, as well as multi-chip integration, which are critical for the performance of AI systems.

The market implications of these developments are profound, as memory has become a strategic delivery constraint rather than a standardized procurement item. The AI system following the Vera Rubin platform continues to raise requirements for HBM and system-level supply, making memory a critical component in determining whether an AI chip platform can be delivered on time. Major customers are increasingly unwilling to wait until capacity is tight to enter the spot market; instead, they are securing future supply through multi-year frameworks.

This shift reflects a recognition that HBM and high-end memory have less supply elasticity and longer customer certification cycles compared to other components. As a result, the ability to secure memory and packaging resources has become a key competitive advantage in the AI industry.

Global memory market forecasts cited in the report indicate that annual revenue is expected to reach approximately $900 billion in 2026, with projections of around $1.3 trillion for both 2027 and 2028. Earlier predictions by TrendForce also suggest that the global memory market size will reach about $1.28 trillion in 2027. Key players in this market include Samsung, SK Hynix, Micron, KIOXIA, and Chinese memory manufacturers. These figures highlight the massive scale of the memory industry and the significant stakes involved in securing supply contracts. The growth trajectory of the memory market is closely tied to the expansion of AI infrastructure, as HBM and other advanced memory technologies are essential for supporting the computational demands of AI workloads. The competition among these manufacturers is intensifying, with each seeking to capture a larger share of the growing market.

Despite the large scale of these collaborations, Bernstein’s assessment of the impact on TSMC remains relatively restrained. Even if Broadcom were to shift some AI ASIC orders to Samsung in the future, the impact on TSMC’s recent profits may be limited, as the demand for advanced capacities remains strong. Samsung obtaining more AI customer validation opportunities does not necessarily mean that TSMC will immediately lose orders.

The true test for Samsung is its delivery capability, as AI chip customers require stable HBM, logic chips, packaging, substrates, yield rates, and lead times simultaneously. If any of these links slow down, it will be challenging to translate the technological roadmap in the MOU into actual shipments. Bernstein maintained Outperform ratings on Samsung Electronics, SK Hynix, Micron, NVIDIA, and Broadcom, with KIOXIA rated Underperform. Price targets were set at 440,000 Korean won for Samsung, 3.3 million Korean won for SK Hynix, $315 for NVIDIA, and $550 for Broadcom.

The most definitive signal of these collaborations is not the finalization of a $700 billion order, but the strategic locking of memory and packaging resources under multi-year frameworks. The ability to deliver on these commitments will depend on capital expenditures in financial reports, HBM shipments, customer prepayments, capacity expansions, and actual delivery schedules. Risks remain, as MOUs and partnerships are not final purchase contracts, and pricing, quantity, and delivery schedules have not yet been disclosed. The progress of the Chinese storage industry, particularly in the NAND sector, will also impact industry profit margins, adding another layer of complexity to the competitive landscape. For further insights and community discussion, readers are directed to BlockBeats’ official channels, including their Telegram Subscription Group, Telegram Discussion Group, and Official Twitter Account.