Korea Inc. still adrift amid the storm
Published: 19 Nov. 2024, 20:16
Park Soo-ryeon
The author is industrial news editor of the JoongAng Ilbo.
The common wisdom is that wealth attracts wealth. The stock gold rush around Nvidia’s AI-powering GPUs has spilled into the debt market. According to a report by the Financial Times earlier this month, the Wall Street’s top financiers such as Blackstone, Pimco, Carlyle and BlackRock have lent a combined $11 billion to “neocloud” companies like CoreWeave, Crusoe and Lambda Labs by using their stocks of Nvidia’s GPUs as collateral.
Neoclouds — a new breed of cloud service platforms — lease GPUs to AI companies or datacenter operators through the cloud. But now, these neoclouds are offering their own GPUs as collateral for loans to acquire the latest GPU models. The red-hot chip’s value is actually fluid as it depends on the release of newer GPU models and supply flow. But that liquidity rather helped expand the AI market.
Few can be sure if this development represents a novel marriage of innovation and financing or if we should worry about the Wall Street’s risky bet on Nvidia’s long-running dominance. But certainly, the winner of the new debt market is the chipmaker which now influences both the supply and demand to command a GPU economy.
Nvidia’s CEO Jensen Huang has been touring around the globe to spread his new business model to eager markets like India, Europe and Japan. He claims that data centers armed with GPUs will define the race for the digital era just like steam engines and electricity determined success in industrialization in the 18th and 19th centuries. Huang is not simply selling his GPU products but a vision for the future. That’s why Nvidia is attracting the world’s top talents and capital.
In Nvidia’s AI summit in Tokyo, he sat with SoftBank Group Chairman and CEO Masayoshi Son to share a vision on AI revolution. The duo announced an ambitious scheme to establish an AI grid in Japan for the first time. That represents Nvidia’s pledge to provide next-generation GPUs to Japan first and Softbank’s promise to purchase a large quantity of them.
But why Japan? The country wants to seize the AI momentum to restore its past tech reputation. No doubt Japan was the first in Asia to achieve industrialization and aspired to become a global imperial power a century ago. But the country has stayed mostly peripheral in the global innovation race over the past 30 years.
Japan has been stampeding to catch up in recent years. It is hosting Taiwan’s TSMC’s next-gen foundry and OpenAI’s Asian branch in Tokyo. Timed with Huang’s trip to Japan, Japanese Prime Minister Shigeru Ishiba pledged 10 trillion yen ($65 billion) of support to Japan’s chip and AI sectors through 2030. It will truly be a milestone business model if Nvidia contributes to Japan’s industrial recovery.
Japan thankfully has a zealous entrepreneur posing as an AI czar for the country. Son is as keen as the country to ride on the AI wave. Despite his preaching on AI revolution, his massive Vision Fund missed out on OpenAI’s earlier funding rounds. Nevertheless, the chairman draws respect from Huang due to his obsession with artificial superintelligence.
But strangely, the AI frenzy in Japan and elsewhere in the world has not caught up in Korea. We don’t see any visionary businessman like Huang out to command the world’s AI infrastructure or a passionate investor like Son chasing his dream about creating an innovation-based empire to earn a moniker as a “gambling man,” according to his biography author and former Financial Times editor Lionel Barber.
We rarely hear visionary speeches from entrepreneurs of small or large companies. Ambition is hard to find as the third- to fourth-generation owners are mostly preoccupied with inheritance tax cuts or amendments to the Commerce Act. Once an IT powerhouse, Korea now lacks AI infrastructure. Building a power transmission tower requires decades of wrangling with residents over land compensation. Creating a chip cluster or data centers is also not easy. Big-tech companies prefer opening their offices or facilities in Japan, Singapore or Taiwan instead of Korea.
Our tech bellwether Samsung Electronics is no different. Investors are looking beyond numbers in its financial statements or buyback program. They want to know what they can expect from the company five or 10 years later. The general opinion is that few can fathom where Samsung is heading.
The past years of quiescence and complacency can be held accountable for the company’s current stagnation. Samsung must speak up. We hope the company will recover its ambitions of the past before it’s too late.
Translation by the Korea JoongAng Daily staff.
with the Korea JoongAng Daily
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