Three Questions to June Park: South Korea, the United States, and the Gulf-Semiconductors in the Development of AI

How is South Korea’s semiconductor industry powering ahead in the AI revolution?

South Korea has emerged as a global leader in HBM (high-bandwidth memory) technology-a key component in AI chip development. HBM enables the handling of massive volumes of data at high speed via adding several data transmission layers, akin to expansion of lanes on a highway to allow more traffic to flow simultaneously. Given their critical role, HBMs are expected to maintain strong aggregate growth, especially as data centers expand in the United States and elsewhere.

In this competitive landscape, Samsung is currently trailing behind SK Hynix, whose revenues in recent years have been remarkable. However, nothing is guaranteed-we have yet to see what revolutionary breakthroughs might follow GPUs, as the next major technological leap, possibly via NPUs (neural processing units), are under development.

South Korea’s success in HBMs does not eliminate certain emerging concerns. First, although SK Hynix continues to lead in HBM innovation, potential technology transfers to China could undermine its competitive edge. The Chinese firm ChangXin Memory Technologies is entering the market, raising alarms in South Korea over possible talent poaching of engineers voluntarily seeking new opportunities in China or with U.S. firms such as Micron, even when aware of legal consequences of tech transfer under South Korean laws.

Second, South Korea’s entire semiconductor ecosystem depends heavily on vast amounts of electricity and clean water. Questions remain over the country's long-term energy strategy, particularly following efforts by the previous progressive administration to phase out nuclear power.

Finally, financial uncertainties persist. Subsidies under the U.S. CHIPS and Science Act have yet to be disbursed to South Korean companies, and the U.S. Commerce under the Trump administration considers reducing the subsidies to be offered. While TSMC has already received $1.5 billion, Samsung and SK Hynix are still waiting for the support they were promised. Samsung Electronics, which committed to building a foundry in Taylor, Texas, was pledged $6.8 billion by the U.S. Commerce under the Biden administration. However, in September 2024, parts of the project were repatriated to Korea, raising fresh doubts about its future.

You closely follow the geoeconomics of technology in the Gulf and the US. What was the semiconductor and AI dimension of President Trump’s recent visit to the Gulf?

First, it’s important to note that intra-regional competition among Gulf states is intensifying, and the quest for AI is driven by their broader ambitions to diversify economies beyond oil and gas. Within this context, among the 6 Gulf states, the UAE has shown strong interest in developing local foundry capabilities. The United Arab Emirates (UAE) has been more proactive in building sovereign AI and obtaining access to AI chips for its data center projects than others. A prominent example is the Stargate UAE Project-a major U.S.-UAE cooperation initiative aimed at building one of the world’s largest AI data campuses.

The Stargate Project in the U.S. involves a high-profile consortium including Nvidia, OpenAI, Cisco, Oracle, SoftBank, and MGX, an Emirati state-owned AI investment firm established in 2024 by the Abu Dhabi government via two entities: the UAE sovereign wealth fund Mubadala and the UAE’s AI firm G42. MGX emerged as the vehicle for investment for G42 into the U.S. amid U.S. concerns over ties to Beijing in 2024 when G42 sought partnership with Microsoft on data centers to fulfill its global ambitions as an AI player. At the time, the U.S. demanded G42’s divestment in ByteDance, a Chinese multinational internet technology company and the parent company of TikTok. MGX now functions as the main facilitator for the UAE’s overseas investment. Upon Trump’s recent trip to the Gulf, MGX made investment ($2bn) in the crypto exchange Binance using the Trump-tied stablecoin (USD1). 

At its core, Stargate is about creating a pathway for U.S. companies to build AI data centers abroad, with Nvidia’s GPUs (graphic processing units)-powered by high-bandwidth memory-as the technological backbone. A telling signal of this strategic intent was the Trump administration’s decision to rescind the AI Diffusion Rule ahead of the Gulf visit. This move was designed to ease restrictions to certain key partner countries in Tier 2 and enable U.S. tech firms to expand globally.

Amid the current Israel-Iran tensions and the U.S. in the middle of the conflict, it is not easy to predict how the landscape of regional politics would unfold, especially if and when the Gulf states are impacted by U.S. actions.

Talking about China, key figures within the Trump administration’s national security establishment were displeased by the developing relationship between the US and the Gulf countries in view of potential tech transfers to China. What insights does this US Gulf trip offer into the current American semiconductor policy?

When it comes to U.S.-Gulf technology cooperation, opinions within the United States are broadly divided into three camps: those who prioritize national security concerns, those who focus on commercial interests, and those who advocate for a strategically selective approach to partnerships based on geopolitical alignment.

The Stargate Project has triggered national security concerns in Congress, particularly over the risk of technology spillovers or chip transfers to Chinese entities via MGX-linked ventures. Early anxieties stemmed from the release of R1 by China’s DeepSeek, an AI model reportedly developed using Nvidia’s H20 chips. That episode played a key role in prompting the initial implementation of the AI Diffusion Rule. As President Biden’s term drew to a close, his administration ensured that the rule would apply to the construction of AI data centers abroad. Countries such as Singapore and several Gulf states-initially confident that their foreign policy alignment with Washington would spare them from the most stringent controls-were ultimately designated as Tier 2 countries, facing substantial restrictions on access to advanced chips.

With the rule now rescinded, questions remain about the future shape of U.S. export controls, particularly in relation to high-bandwidth memory (HBM) technologies. What remains clear, however, is that decades of deep-rooted industrial linkages with China have lasting impact that cannot simply be undone by even the most well-crafted export control frameworks.

Consider the role of Samsung and TSMC: their past cooperation was instrumental in enabling the rise of SMIC, China’s leading semiconductor foundry. Export controls were central to the Biden administration’s tech policy agenda, though debates persist as to whether they have helped or harmed the industry-especially in light of revenue losses cited by affected firms. Meanwhile, American and European companies continue to invest in China, a trend that underscores a certain irony: commercial behavior often diverges from the policy intent of export controls. 

For instance, around 20% of Nvidia’s global revenues reportedly passed through Singapore. Even with export controls in place, enforcing them comprehensively remains a formidable challenge-not only across Asia, but also within Europe and the United States, given divergent regulatory frameworks and enforcement standards.

Copyright Image : Brendan SMIALOWSKI / AFP
Donald Trump and Mohamed Ben Zayed in Abu Dhabi on May 15, 2025.