South Korean memory chipmakers extend losses after Google unveils memory-saving algorithm

Shares in South Korean chipmakers and equipment suppliers extended losses on Friday after Google GOOGL.O earlier this week unveiled a new compression algorithm, TurboQuant, which it said allows AI systems to use much less memory without hurting performance

Shares of Samsung Electronics 005930.KS and SK Hynix 000660.KS drop as much as 4.4% and 4.9%, respectively. SK Hynix supplier Hanmi Semiconductor 042700.KS drops up to 5.8%

Concerns over a potential slowdown in memory demand, driven by gains in AI efficiency, weigh on chipmakers, sending shares of Micron MU.O down 7% and Sandisk SNDK.O tumbling 11%

Analysts say the emergence Google's TurboQuant technology would unlikely to lead to a structural decline in memory demand, noting that the technology remains at an early, research-stage phase and will take time before it sees real-world deployment

They say improved efficiency in AI could lower operating costs and increase accessibility, encouraging more companies to enter the AI ecosystem. That, in turn, could expand the overall AI market and drive higher aggregate demand for memory

The broader KOSPI market .KS11 was trading down 3.6%, as of 0021 GMT