South Korean VCs Pivot to Semiconductor Materials for AI Chip Race
State-run banks and private firms are funding deep-tech startups to secure the domestic supply chain for High Bandwidth Memory.
South Korean venture capital firms and the state-run Korea Development Bank (KDB) are aggressively investing in local semiconductor material startups. This strategic push aims to bolster the nation's capabilities in the global race for AI chip dominance, specifically targeting the materials required for High Bandwidth Memory (HBM).
In a significant move for the sector, semiconductor materials startup Eport recently raised 21.2 billion KRW in a Series B funding round. The round saw broad institutional support, with investments from KDB, KIP, ID Ventures, Wonik Investment, EcoPro Partners, Pentastone, Baro Ventures, Flux Ventures, Kiwoom Investment, Stick Ventures, and WeVentures. Other startups in the materials space, including COFA and iChems, are also actively seeking capital to scale their operations.
The Shift Toward Deep-Tech
South Korea has long maintained a global leadership position in memory technology through giants like Samsung and SK Hynix. However, the rise of AI has fundamentally changed the requirements for memory hardware. AI chips demand specialized, high-performance memory such as HBM, which requires advanced underlying materials and sophisticated chemical manufacturing processes. This technical evolution has prompted a visible shift in venture capital interest, moving away from traditional platform-based businesses and toward deep-tech and hardware materials.
Strategic Supply Chain Security
Securing a domestic supply chain for these critical materials is a strategic priority for Seoul. By fostering local innovation, South Korea aims to reduce its historical reliance on foreign imports, particularly from the U.S. and Japan. This transition indicates that investors now view industrial materials not just as components, but as critical infrastructure for the AI era. Strengthening this value chain ensures that the hardware necessary for AI acceleration remains resilient against geopolitical volatility.
Future Outlook
As the demand for AI-optimized memory continues to climb, the focus is expected to remain on the scaling of these material startups. Market observers will be watching for further large-scale funding rounds and the potential for these startups to integrate directly into the supply chains of major chipmakers. While the current trend favors hardware, the long-term success of these ventures will depend on their ability to maintain a technical edge in the rapidly evolving HBM landscape.