South Korea unveils $576B chip and AI investment plan

South Korea on Monday unveiled its largest-ever semiconductor investment plan, with Samsung Electronics and SK Hynix committing 800 trillion won (approximately $518 billion) to build four new chip fabrication plants in the country's underdeveloped southwest, marking a historic geographic expansion of the nation's chipmaking capacity.

A 'Great Leap Forward' for Regional Development

President Lee Jae Myung announced the initiative — dubbed "Three Mega Projects for the Big Stride Forward" — at a national briefing on June 29, flanked by Samsung Electronics Chairman Lee Jae-yong and SK Group Chairman Chey Tae-won. Each company will build two fabrication plants in the Gwangju and South Jeolla province area, according to Industry Minister Kim Jung-kwan.reuters+2

The southwestern Honam region will become South Korea's second major semiconductor production hub, a departure from the companies' existing manufacturing clusters concentrated in the Seoul metropolitan area. Lee said the city of Gwangju and South Jeolla province would invest an additional 5 to 20 trillion won in the projects, while a separate 81 trillion won chip packaging cluster is planned for the Chungcheong area near Seoul.thestar+2

Aligning AI Ambitions with Balanced Growth

The semiconductor plan is part of a broader package worth over $576 billion spanning chips, AI data centers, and physical AI including robotics. Lee cast the initiative as built on a "triple axis" of semiconductors, physical AI, and data centers, framing the investment as a way to extend the economic benefits of the AI boom to regions outside the capital.upi+3

The government also plans to double South Korea's DRAM output within five years by accelerating construction of fabs in the Seoul area that had been scheduled for the mid-2030s. Presidential policy adviser Kim Yong-beom said last week that "exponential and explosive" demand from the AI sector could require the companies to speed up new facility construction by more than a decade.money.usnews+2

Scale and Global Context

The plan cements South Korea's position at the center of the global memory chip supply chain at a time of intensifying competition among nations to secure semiconductor manufacturing capacity. Observers cited by the Korea Economic Daily estimated total investment from Samsung Group and SK Group across all projects could reach 2,000 trillion won over 10 years. The southwestern region's appeal lies partly in its abundant, underused power supply — a critical resource for chip fabrication.chosun+2

Science Minister Bae Kyung-hoon said separately that South Korea would invest 550 trillion won in AI data centers by 2029, with capacity eventually reaching 18.4 gigawatts by 2035.turkiyetoday