Any hope that the memory-chip shortage would ease this year was upended Monday morning, as South Korea's two memory giants, Samsung and SK Hynix, prepare a massive capacity expansion that will unfold over the next five years rather than provide near-term relief. That means the supply squeeze rippling through consumer electronics, from Apple MacBooks to Microsoft Xbox consoles, is likely to keep driving prices higher  for the foreseeable future.

The Korea Economic Daily reports that South Korea plans to steer at least 1,350 trillion won, or about $880 billion, of private investments into expanding semiconductor manufacturing and AI data centers.

Samsung and SK Hynix plan to build four chipmaking plants in the country's southwest at a combined cost of 800 trillion won, while companies including Naver will invest another 550 trillion won to develop 8.4 gigawatts of AI data-center capacity by 2029.

"We're entering an era where the page turns in the blink of an eye," President Lee Jae Myung said, adding the country must accelerate faster than rivals, calling speed "the only way to survive" in the AI era.

South Korea's industry ministry wrote in a statement that the move aims to double the country's memory chip production capacity within five years and to secure its lead in chip production amid competition from China and Taiwan.

The memory crunch worsened last week when Apple and Xbox were forced to raise prices on MacBooks and gaming consoles. Then, a weekend story reported that Apple plans to tap China for memory, given the shortage that will persist through this year and next as AI demand soaks up memory supply.

Samsung shares fell nearly 5% Monday, while SK Hynix declined 1.7%.

JPMorgan analyst Jay Kwon provided clients with a first take on news from South Korea, calling the country's AI investment push the start of the "Mega Investment Era" and a move to strengthen its lead in memory chips, data centers, and physical AI.

The plan centers on three growth pillars: semiconductors, AI robotics and physical AI, and AI data centers, Kwon noted.

Here's more color:

Entering the Mega Investment Era. The Korean government (Presidential office and multiple cabinet members) and major AI ecosystem C-level executives (incl. Samsung/SK group chairmen) attended a national briefing today and shared the long-term AI mega project vision.

The Ministry of Trade, Industry and Resources ("MOTIR") announced the "Three Mega Project Plans" establishing 1) semiconductors; 2) AI robotics and physical AI; and 3) AI datacenters as the three major growth pillars (link). The genesis of the investment stems from retaining the current AI leadership (especially in AI semiconductors) and leapfrogging as an AI export country through nurturing and developing various AI-derivative businesses including robotics and AI datacenters. Within the semiconductor business, MOTIR highlighted 3S (Speed + Stronghold + Spearhead) + 1F (Full Support) as growth strategies: 1) Speed: MOTIR expects memory capacity to double in the next five years and pull-forward the advanced Yongyin fab ramp timeline by 7-12 years (From 2045-2047 to 2033-2040); 2) Stronghold: W800T investment in the Southeast region (four fabs in total) and W81T HBM backend fab investment in the Chungcheong region; 3) Spearhead: W30T investment over the next 15 years in R&D and labor to support the pathway from R&D to full production; and lastly 4) Full Support from the government backed by MOTIR. Other investments include fostering Robotics as the next growth engine and W550T investment in AI DC split between two phases (1st phase: 8.4GW and 2nd phase: W10GW investment by 2035).

Samsung Group: W2,655T investment of which W2,100T in semiconductors. Samsung Group announced a W2,655T investment in Korea (link) and SEC announced a W2,450T investment throughout 2026-2040 (W2,100T investment in semiconductors) (link). Combining the two investment announcements, SEC is expected to invest: 1) W1,650T in Yong-in fab cluster and existing semiconductor fabs; 2) W400T in Gwangju potentially as a new manfuacturing hub; 3) W56T in HBM backend packaging line in Cheonan/Onyang; 4) W67T in next-gen display and micro display in Asan; and 5) <W60trn in physcial AI and humanoid mass production line in Gumi. Within the Samsung group, other investment includes: SEMCO (Substrate packaging fab in Sejong and MLCC/substrate fab in Busan); Samsung SDS (AI DC buildout in Haenam and Gumi); Samsung C&T (Green energy, power facilit

SK Group: W2,100T investment (W1,100T in memory and W1,000T in AI infrastructure). SK Group explained the role of the datacenter is transistioning from storage to token generation and emphasized AI factory as the next growth engine of the group (link). The SK Group announced to invest W1,000T in AI infrastructure equating to 15GW by 2035 split between two phases (1st phase of 5GW ramp split between a mix of 0.5GW/1GW projects and an additional 10GW ramp by 2035). SK Group also announced that it will invest W1,100T in memory split between W600T in Yongin (pulling forward the ramp time from 2045 to 2033), W100T in NAND in Cheongju, and W400T for the next semiconductor cluster, potentially in the Southeast region.

JPM view: W4,755T (or US$3.1T) includes more than a dozen of~400k WSPM fab investments on a scale which is 2x that of the current installed DRAM WSPM capacity, implying the pace of building 1mn additional DRAM capacity (from 1H16- 1H26) will be multiple times faster than in the past after the tipping point in late2020s. Within the US$3.1T long-term investment plan, we estimate 60-70% to be allocated to front-end wafer equipment spending, 20-30% for infrastructure and cleanroom construction, and the rest for back-end packaging facilities. We expect to hear more details on specific timelines for investment (fab and investment plan in multiple stages and timeline) in the upcoming result season and follow-up corporate events

Investment Details:

The planned spending underscores South Korea's preparation for physical AI, but also shows that any immediate relief for memory chips won't happen anytime soon.