South Korea announced more than $1 trillion in combined investments in AI and chip infrastructure on Monday, in a sweeping industrial strategy aimed at cementing the country’s dominance in the global semiconductor boom. President Lee Jae Myung unveiled the plan alongside the heads of Samsung Electronics and SK Hynix, the world’s two largest memory chipmakers, framing the initiative as essential to securing South Korea’s future in AI.
Samsung and SK Hynix will invest 800 trillion won ($518 billion) with suppliers to build two new chip fabrication sites each in South Korea’s southwest region, according to Industry Minister Kim Jung-kwan. The southwestern city of Gwangju and South Jeolla province will also invest 5 trillion to 20 trillion won ($3.2 billion to $13 billion) in the projects, while a further 81 trillion won ($52.5 billion) is expected for a chip-packaging cluster in the Chungcheong area near Seoul.
The government also unveiled plans to build AI data centers backed by 550 trillion won ($356 billion) in investments from the SK Group, GS Group and Naver. By 2035, South Korea plans to build an additional 10-gigawatt AI data center with total investment exceeding 1,000 trillion won ($648 billion), according to Science Minister Bae Kyung-hoon.
“We must secure the core elements of AI faster than any other country,” Lee said in a televised address. The president cast the initiative as a “great leap forward” centered on the “triple axis” of semiconductors, physical AI and data centers.
Why South Korea’s Bet Matters
South Korea is emerging as a major winner from the global surge in AI investment, driven by Samsung and SK Hynix’s commanding position in high-bandwidth memory (HBM) chips—specialized components essential to advanced AI processors. The country’s semiconductor exports reached a record $37.16 billion in May 2026, a 169.4% increase year-on-year, as memory chip prices surged on growing AI demand.
South Korea’s overall exports jumped 53.2% in May 2026 to $87.75 billion, the fastest growth since January 1984, according to Reuters. This export boom reflects sustained demand from global tech giants investing heavily in AI infrastructure. Industry experts note that Samsung and SK Hynix have sold their entire 2026 memory chip lineup to customers, signaling unprecedented market tightness.
The investment plan addresses infrastructure bottlenecks in Seoul’s existing chip production hubs. “Existing sites centered around Yongin and Pyeongtaek have already reached their limits,” Lee said, pointing to the need for new manufacturing capacity in the southwest to meet surging global AI demand.
However, industry observers have raised concerns about the pace and scale of the expansion. Lee Jong-ho, a professor at Seoul National University’s Department of Electrical and Computer Engineering, told Reuters that “to execute something of this magnitude properly requires an extraordinary amount of deliberation.” He warned that building cutting-edge fabs requires vast electricity and water supplies, advanced logistics, deep supplier networks and highly skilled labor—elements that may not scale quickly enough in a new region.
Opposition politicians have criticized the plan, questioning whether the proposal is politically motivated given that 85% of voters in the southwest region backed Lee in last year’s presidential election. Lee defended the project in a series of posts over the weekend, rejecting claims that it favors a regional stronghold and arguing instead that it addresses long-standing economic disparities outside Seoul.
The announcement also includes plans for a robotics and parts cluster on the west coast, where Hyundai Motor has invested, to develop humanoid robotics technology and rival advances in countries including China. This broader industrial strategy reflects South Korea’s determination to secure leadership across multiple AI-related technologies as global competition for semiconductor dominance intensifies.
Sources
- Al Jazeera — South Korea’s announcement of more than $1 trillion in AI and chip investments, details on Samsung and SK Hynix’s 800 trillion won investment, and government support from local regions
- Reuters — Confirmation of $576 billion in chip investment by Samsung and SK Hynix, AI data center plans totaling over $1 trillion by 2035, expert commentary from Seoul National University, and South Korea’s export growth hitting a four-decade high at 53.2% in May 2026
- BBC — Overview of South Korea’s $880 billion investment plan for chip manufacturing and AI capabilities, and regional context on Taiwan, China and Japan’s competing investments
- WSJ — South Korea’s exports surging 53.2% in May 2026 to a record $87.75 billion, the fastest growth since January 1984
