South Korea Is Spending $576 Billion on Chips — Here’s What Samsung and SK Hynix Are Building

TLDR

• South Korea unveiled a sweeping plan with over $576 billion in chip and AI investment
• Samsung and SK Hynix will build two new chip fabrication sites each in the country’s southwest
• The plan is part of President Lee Jae-myung’s “Three Mega Projects” covering chips, data centres, and robotics
• South Korea aims to double DRAM output within five years
• Critics question whether the southwest chip hub is politically motivated, given strong voter support for Lee in that region

South Korea’s President Lee Jae-myung announced one of the country’s largest industrial plans on Monday, centring on semiconductors and artificial intelligence. The total investment is expected to reach over $576 billion, with Samsung and SK Hynix leading the charge.

The plan is part of what the government calls its “Three Mega Projects,” covering chip production hubs, data centres, and robotics technology.

Lee framed the initiative as a matter of national survival, saying the country must “secure the core elements of AI faster than any other country.”

Samsung and SK Hynix at the Centre

Samsung and SK Hynix, along with their suppliers, will invest 800 trillion won — roughly $518 billion — to build two new chip fabrication sites each in South Korea’s southwestern region.

Samsung Electronics Co., Ltd., SMSD.L

The southwest city of Gwangju and South Jeolla province will contribute an additional 5 to 20 trillion won to the projects.

A chip packaging cluster in the Chungcheong area near Seoul is also planned, with an expected 81 trillion won in further investment.

Samsung’s Chairman Jay Y. Lee confirmed the company has selected Gwangju as its new chip cluster site. SK Hynix’s Chairman said the firm still needs more time to finalise its location and secure the necessary infrastructure.

The government also plans to double DRAM output within five years by accelerating construction of new fabs in the Seoul metropolitan area to the mid-2030s.

Political Pushback and Industry Concerns

The announcement has drawn criticism from opposition politicians, who say the southwest location was chosen for political reasons. Around 85% of voters in that region backed Lee in last year’s presidential election.

Lee’s approval rating has also slipped for six consecutive weeks, sitting at 46.5% according to pollster Realmeter.

Lee pushed back on the criticism over the weekend via posts on X, rejecting suggestions the plan favours a liberal stronghold.

Industry experts say spreading chip investment beyond Seoul could ease infrastructure pressure in existing hubs. However, they warn that building advanced fabs requires vast amounts of electricity, water, land, skilled workers, and deep supplier networks — resources that may not be available quickly enough in a new region.

SK Hynix’s Chairman pointed to the scale of the challenge, noting it took nine years to build the company’s cluster in Yongin.

The push comes as global demand for high-bandwidth memory chips — used to power AI systems — continues to rise. SK Hynix’s stock market value crossed $1 trillion in May.

South Korea’s rivals, including Taiwan, China, and Japan, are also investing heavily in chip production as AI drives up semiconductor demand worldwide.

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