South Korea is betting more than $576 billion on chips and AI.
South Korean President Lee Jae Myung laid out a sweeping industrial strategy on centred on semiconductors and artificial intelligence.
The plan, anchored by Samsung Electronics and SK Hynix, is Lee’s boldest attempt to tie AI dreams to chip dominance and regional revival. Lee wants growth beyond the Seoul metropolitan area.
Flanked by the heads of the world’s two biggest memory chipmakers, Lee cast the initiative as a “great leap forward”.
He said it would be centred on the “triple axis” of semiconductors, physical AI and data centres.
“We must secure the core elements of AI faster than any other country,” Lee said in a televised address.
South Korea industry minister Kim Jung-kwan said Samsung and SK Hynix will invest 800 trillion won, about €454.3 billion, to build two new chip fabrication sites each in the southwest.
Lee said Gwangju and South Jeolla province will invest 5 trillion to 20 trillion won, about €2.8 billion to €11.4 billion, in the projects.
A further 81 trillion won, about €46 billion, is expected for a chip packaging cluster in the Chungcheong area near Seoul.
“To meet the rapidly increasing demand for semiconductors, we need to quickly complete the production hubs that are currently under construction,” Lee said.
“At the same time, we must secure overwhelming production capacity in advance through large-scale new investments, including in the southwestern region. Existing sites centred around Yongin and Pyeongtaek have already reached their limits,” he said.
Lee said the southwest will host major chip production clusters, drawing on abundant and underused power.
Industry experts say spreading chip investment beyond Seoul could ease infrastructure bottlenecks.
They warn that advanced fabs need huge amounts of power, water, logistics, supplier networks and skilled labour.
Seoul National University Department of Electrical and Computer Engineering professor Lee Jong-ho said: “To execute something of this magnitude properly requires an extraordinary amount of deliberation. I am sure there has been extensive internal review, but from the outside, it still appears to be moving too fast.”
“It would be ideal if demand remained strong for the next 20 or 30 years, but no one can know that with certainty…If demand were to decline, the consequences would be severe,” Lee said.
South Korea is emerging as a big winner from the global AI investment surge.
Samsung Electronics and SK Hynix hold a commanding position in high-bandwidth memory chips, which are essential to advanced AI processors.
Their grip on HBM supply has made them central to the race to build more powerful AI systems. Both companies already run large semiconductor hubs in the Seoul metropolitan area.
Kim said South Korea will double dynamic random-access memory output within five years.
It plans to bring forward construction of fabs in the Seoul metropolitan area to the mid-2030s.
DRAM powers electronics such as laptops and smartphones, while HBM is made by stacking multiple layers of DRAM.
Samsung Electronics chairman Jay Y Lee said the company had picked Gwangju for its new chip cluster.
SK Hynix chairman Chey Tae-won said his outfit needed more time to finalise a site and secure infrastructure in the southwest.
“It took us nine years for us to create a cluster in Yongin. Also, a chip factory requires massive land, power, water and talent,” Chey said.
Some analysts warned that the investment splurge could create a supply glut, which would be a very expensive way to prove enthusiasm is not a business model.
Opposition politicians have attacked Lee’s southwest chip hub, questioning whether it is politically motivated.
About 85 per cent of voters in the region backed Lee in last year’s presidential election.
The announcement comes as Lee’s approval rating has slipped for six weeks to 46.5 per cent, according to pollster Realmeter.
Lee defended the southwest chip hub in a series of X posts at the weekend, rejecting criticism that it favours a liberal stronghold.
South Korea’s science minister, Bae Kyung-hoon, said the country wants to invest 550 trillion won, about €312.4 billion, in AI data centres by 2029.
Bae said investment should rise to more than 1,000 trillion won, about €567.9 billion, by 2035.
The government wants decentralised infrastructure to support regional growth beyond the capital.
Seoul plans a robotics and parts cluster in Saemangeum on the west coast, where Hyundai Motor has invested.
The aim is to rival advances in humanoid robotics in countries including China, which is the sort of ambition that tends to arrive with glossy slides and a terrifying electricity bill.
