*[Global Morning Briefing] summarizes global news delivered by Seoul Economic Daily.*
Google Hits AI Infrastructure Bottleneck, May Stall Growth as Contracted Capacity Falls Short
Google reportedly failed to provide as much AI computing capacity as its major client Meta had requested. With power, chip, and infrastructure supply unable to keep pace with AI development demand, even Google and Meta, regarded as the world's largest AI companies, have run into infrastructure bottlenecks.
The Financial Times (FT) reported that in March this year, Google informed Meta that it could not provide as much "Gemini" capacity as it wanted. Meta has its own AI model "Llama," but has been using the higher-performing Gemini.
Until now, AI bottlenecks were seen mainly as a problem faced by small and medium-sized startups. This was because core AI chips—including GPUs from Nvidia and AMD, custom chips, and high-bandwidth memory (HBM) from Samsung Electronics, SK hynix, and Micron—had been allocated first to well-funded Big Tech and ultra-large AI startups. But this case shows that even the Big Tech firms leading the market are not free from bottleneck problems.
Google's parent company Alphabet said cloud revenue surpassed 20 billion dollars for the first time in the first quarter this year, but its backlog—contracts signed but not yet fulfilled—reached 460 billion dollars, roughly double the previous quarter. This represents demand 23 times its processable capacity. Google signed a computing lease contract with SpaceX worth 920 million dollars per month, but assessments say it remains insufficient. As a result, Meta has been unable to even set a launch schedule for the developer tools of its new AI model "Muse Spark," and is advising employees to use AI tokens more efficiently.
Meanwhile, the Bank for International Settlements (BIS) warned in its annual report that the AI investment fervor is proceeding at a far steeper pace than during past canal, railway, and dot-com bubbles, and that such optimism could lead to a long-term investment downturn and financial market instability.
Samsung, SK hynix, Micron Sued in US Over Memory Price-Fixing
Samsung Electronics, SK hynix, and Micron have been sued by consumers in the US over allegations of memory price-fixing. As "chipflation" intensified with consecutive price increases on products such as Apple's, local consumers and small and medium-sized businesses have taken legal action.
According to tech outlet Wccftech and legal outlet LAW360, on the 25th, 14 individual consumers and three small and medium-sized businesses, including PC sellers, filed a lawsuit in California federal court. The plaintiffs claimed that these three companies, which produce most of the world's DRAM, colluded on supply volume and pricing from 2022, raising prices by about 700% over four years. They also pointed out that the companies systematically coordinated to reduce DRAM supply under the pretext of the HBM transition and discontinue DDR3 and DDR4. They said Apple's recent large-scale price increase was the direct trigger for filing the lawsuit.
It is currently a small-scale lawsuit, but if the court formally certifies a class action, the scale could expand significantly. The plaintiffs' law firm Bathaee Dunne said it aims for a class action representing all consumers and businesses that purchased products containing DRAM. Bathaee Dunne also has a track record of reaching a settlement in a past Google digital advertising price-fixing lawsuit. If the class action succeeds, the sued companies would have to pay triple the amount of damages.
Samsung Electronics and SK hynix have a precedent of being found guilty of collusion in the US in the early 2000s and receiving large fines and prison sentences for executives and employees, raising concerns. However, investment bank Jefferies and others projected that this lawsuit will not have a substantial impact on memory prices at least until the end of this year.
China Angered by Japan's Joint Drills with Philippines, Doubles Export Restriction List
China's Ministry of Commerce announced on the 29th that it had added 20 institutions and companies, including Japan's National Institute for Defense Studies and Mitsubishi Electric Software, to its export control list for dual-use goods such as rare earths, and 20 others, including Mitsui E&S, to its watch list. It cited the acceleration of Japan's "new militarism" and overseas missile launches. This was added to the February measure (40 entities), bringing the total number of sanctioned entities to 80.
This measure is analyzed as having been triggered by Japan's participation in the US-Philippines joint exercise "Balikatan" and the announcement of the start of Japan-Philippines negotiations on delimiting EEZ and continental shelf boundaries. The waters in question overlap with eastern Taiwan and border areas where China claims rights, and the regularization of drills could lead to the construction of an operational network in case of contingencies in the South China Sea or Taiwan, prompting a sensitive reaction from China. The China Coast Guard also staged armed demonstrations this month, including patrols and seabed surveys in waters east of Taiwan.
China is also pursuing economic countermeasures, restricting exports of tungsten, terbium, and dysprosium to Japan, while an employee of a Japanese company's local subsidiary was detained on charges of smuggling rare earths.
Japanese Prime Minister Takaichi is scheduled to attend APEC in November but is reportedly reluctant to meet with President Xi Jinping. Concerns are emerging that Japan's diplomatic burden is growing as Russia, North Korea, Pakistan, Bangladesh, and others issued joint statements echoing China's claims.
Kioxia Shareholders Propose Bonuses First, with Speculation of '50 Million Yen Per Person Like Samsung-SK'
As Japanese memory semiconductor company Kioxia Holdings forecasts record earnings amid the AI chip boom, voices have emerged among shareholders calling for a sharp expansion of employee bonuses.
According to the Nihon Keizai Shimbun on the 29th, opinions that earnings improvements should be actively shared with employees came one after another at Kioxia's regular shareholders' meeting held on the 25th. One shareholder in their 60s said, "If you don't distribute profits to employees as well, they may leave for other companies," adding, "There has to be compensation for work to feel worthwhile." A shareholder in their 30s also argued, "At least compensation at the level of global competitors is necessary."
Kioxia has emerged as the top company by market capitalization on the Japanese stock market, driven by surging demand for AI memory semiconductors. Market research firms Quick and FactSet projected that Kioxia's operating profit for the fiscal year ending March 2027 will reach 7.39 trillion yen (about 70.5 trillion won), an eightfold increase from the previous year. Nikkei calculated that applying the case of SK hynix, which pays 10% of operating profit as bonuses, would make a bonus of about 50 million yen (about 470 million won) per employee possible.
However, analysis suggests the likelihood of such large-scale bonus payments actually happening is low. This is because Kioxia operates based on the compensation system from its Toshiba era before becoming independent, making the institutional burden of introducing unprecedented levels of bonuses significant.
Meanwhile, in Japan, semiconductor equipment companies have been active in expanding bonuses. In Nikkei's "winter bonus survey" last year, Disco took first place with 4.49 million yen (about 42.69 million won), and Tokyo Electron and others pay similar levels.
