The world’s two largest memory chip companies plan to invest $518 billion (approximately 800 trillion won) to build four new memory fabs in southwestern South Korea, an area that has historically attracted little semiconductor investment.
The announcement is part of the country’s broader national investment plan spanning semiconductors, AI data centers and physical AI, and was announced at a presidential conference on Monday attended by the chairman of Samsung and SK Hynix. The plan is divided into three buckets. The memory chip bucket includes $518 billion for four new memory fabs in the Southwest and an additional $52 billion for HBM (high bandwidth memory) packaging hubs in the central region. Additionally, South Korean technology and energy giants such as SK, GS, and Naver plan to spend an additional $356 billion (550 trillion won) to build AI data centers by 2035.
Overall, South Korean technology companies have committed to spending more than $900 billion on demand for AI and the chips it creates. With this, the country wants to emerge more than ever as an AI power player. Currently, Samsung and SK Hynix (as well as US memory chip maker Micron) are both enjoying record demand due to the so-called RAMgeddon, a global memory chip shortage caused by the rise in AI.
“Semiconductors, physical AI, and AI data centers are the three axes of South Korea’s next industrial era,” President Lee Jae-myung said in a televised speech on Monday, noting that 2026 is the year South Korea must establish itself as an “irreplaceable” industrial power.
Lee said existing chip facilities in Yongin and Pyeongtaek, the heart of South Korea’s semiconductor belt just south of Seoul, were “already reaching their limits” and called on companies to accelerate investment in the southwest as they hope to spread the wealth of AI beyond the capital. “We must secure overwhelming production capacity in advance,” he said.
However, Lee pushed back against media reports that the government pressured companies to invest, and was reportedly told that the decision reflected the companies’ own judgment. “The role of the government is to invest its capabilities so that companies can invest without loss and with better prospects,” he was quoted as saying.
Samsung issued a separate press release on Monday announcing plans to invest 2,655 trillion won (approximately $1.7 trillion) over the next 10 years, of which 425 trillion won will be allocated to the Honam region, the southwestern tip of the Korean peninsula. The company cited expected incentives such as power, water, labor and living conditions as key factors in choosing Gwangju, about 300 kilometers south of Seoul, for its new semiconductor factory, along with its AI data center in Hainan on the southern tip of the peninsula.
According to Reuters, this is not a staggering amount compared to US tech giants Alphabet, Amazon, Meta and Microsoft, which will spend a total of $650 billion on AI infrastructure this year alone.
Meanwhile, SK Group announced a medium- to long-term investment roadmap of 2.1 trillion won (approximately $1.4 trillion), of which 1.1 trillion won will be invested in expanding semiconductor production capacity and 1.0 trillion won in AI data centers nationwide. SK Hynix, the group’s core semiconductor affiliate, will be at the center of the chip expansion drive, while SK Telecom will lead the construction of 15 gigawatts of AI data center capacity nationwide.
Whether that ambition will be implemented is another matter. Deep tech industries such as semiconductors and AI do not move along the timelines of politics or customer demand. It takes years to build a fab, and by the time it’s ready, the demand that caused it has waned, leaving companies at risk of being oversupplied and causing prices to collapse. For now, companies hungry for the global AI chip supply chain, especially memory in general, will be watching to see if South Korea can pull it off.
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