Memory prices could explode after US threatens Samsung and SK Hynix

On the heels of Micron announcing a new $100 billion foundry complex planned for Syracuse, New York, which is part of the company's wider $200 billion commitment to expanding its facilities in the US, the US Commerce Secretary spoke to reporters and gave a heated statement.

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Howard Lutnick, the US commerce secretary, said last Friday, "Everyone who wants to build memory has two choices: They can pay a 100% tariff, or they can build in America. That's industrial policy." For those who don't know, the DRAM and NAND flash market is currently controlled by three parties: SK Hynix and Samsung, both located in South Korea, and Micron, located in the US. While there are other memory makers, their market share is nothing compared to the aforementioned companies.

More specifically, the three companies previously mentioned are the only companies to manufacture High Bandwidth Memory (HBM), which they are prioritizing over producing standard modules to feed the seemingly never-ending hunger of AI companies and their servers.

Why is this important? The previous administration attracted South Korean memory makers to invest in the US through the CHIPS Act, which provided them with grants and loans. However, neither Samsung nor SK Hynix actually makes the chips in the US; they simply package them.

So, now the US Commerce Secretary has threatened to charge Samsung and SK Hynix with intense levies on importing their products to the US, in what seems like a strong-arm tactic to get both companies to further invest in manufacturing their sought-after chips on American soil. If the tactic doesn't work and deals are made, we could see the 100% or even more trade tariffs come into effect, which will drive the price of memory up even higher than it is currently.