Samsung and SK Hynix have pledged $518 billion to construct four new memory fabrication plants in southwestern South Korea, a region that has historically received little semiconductor investment.
The announcement forms part of a national investment plan covering semiconductors, AI data centers, and physical AI. Leaders from Samsung and SK Hynix attended the presidential briefing where the strategy was unveiled on Monday. The plan divides funding into three areas. The memory chip sector receives $518 billion for the four new factories in the southwest, plus $52 billion for an HBM packaging hub in the central region. Another $356 billion is allocated for AI data centers to be built by major tech and energy firms such as SK, GS, and Naver through 2035.
South Korean tech companies have committed to spend over $900 billion on AI and the chip requirements it creates. The nation hopes to become a more significant player in the field. Currently, Samsung and SK Hynix, alongside US maker Micron, are seeing record demand from a global memory shortage known as RAMageddon.
President Jae Myung Lee stated in a televised address on Monday that semiconductors, physical AI, and AI data centers represent the triple axis for South Korea’s next industrial era. He called 2026 the year the country must establish itself as an irreplaceable industrial power.
Lee noted that existing facilities in Yongin and Pyeongtaek have reached their limits. He urged companies to accelerate investment in the southwest to spread AI wealth beyond the capital. He added that the nation must secure overwhelming production capacity in advance.
Lee rejected media reports suggesting the government pressured companies into these investments. He stated the decisions reflected the firms’ own judgment. The government’s role is to invest its capabilities so that companies can invest without losses and with better prospects.
Samsung published a separate press release on Monday. It announced plans to invest 2,655 trillion won over the next decade. Of this sum, 425 trillion won is earmarked for the Honam region in the southwestern corner of the peninsula. The company cited expected incentives regarding power, water, workforce, and living conditions as key factors. It selected Gwangju, roughly 300 kilometres south of Seoul, for a new semiconductor fab. An AI data centre is also planned for Haenam at the southern tip of the peninsula.
This is not an outlandish sum compared to US tech giants. Alphabet, Amazon, Meta, and Microsoft will collectively spend $650 billion on AI infrastructure this year alone, according to Reuters.
SK Group announced a medium-to-long term investment roadmap. This includes 2,100 trillion won. The plan allocates 1,100 trillion won to expand semiconductor production capacity and 1,000 trillion won for AI data centres nationwide. SK Hynix is central to the chip expansion push. SK Telecom will lead the buildout of 15 gigawatts of AI data centre capacity across the country.
Whether the ambition translates into execution remains uncertain. Deep tech industries like semiconductors and AI do not move on political or customer demand timelines. Fabs take years to build. The risk is that demand will have ebbed by the time they are ready. This could leave companies with oversupply and crashing prices. For now, the world’s AI chip supply chain, especially those seeking memory, will watch to see if South Korea can pull it off.
What it means
Companies making things will face different conditions depending on location. Factories in the southwest will have new capacity available as the current hubs in Yongin and Pyeongtaek hit limits. However, the timeline is long. New plants will not be ready until years later, potentially missing the peak of current demand.
