Samsung Group and SK Hynix are preparing to unveil a decade-long investment plan totaling 1,000 trillion won (approximately $646 billion USD) to expand South Korea's footprint in the global memory chip market. This unprecedented corporate spending package is expected to be announced on June 29 at a presidential briefing at Cheong Wa Dae, attended by top executives from both companies and President Lee Jae Myung.
More than 350 trillion won (approximately $226 billion USD) of this total is specifically earmarked for semiconductors and AI infrastructure, with the remaining funds allocated to advanced displays, next-generation batteries, and regional industrial expansion. This investment exceeds South Korea’s government budget of 728 trillion won and approaches half of the country’s annual gross domestic product. The plan aligns with South Korea's special semiconductor competitiveness law, set to take effect in August, which includes provisions for cluster support, faster permitting, and regional balance in strategic projects.
The push for new facilities is largely driven by exponential demand for AI chips, potentially requiring an acceleration of construction plans by more than 10 years to meet demand initially scheduled for the 2040s. The Honam region, rich in renewable energy, is a prime candidate for a new semiconductor mega-fab due to government efforts to promote balanced regional development beyond the Seoul metropolitan area. Previous reports suggested investment would focus on back-end packaging, but it has expanded to include front-end processes, further increasing the total investment.
Despite the significant economic potential, challenges remain. Infrastructure issues regarding land, power, and water, along with potential labor shortages in the southwestern regions, could complicate the project's success. Some experts also express concerns that the initiative risks inflating property prices and widening inequality. Additionally, some opposition lawmakers suggest the plan is politically motivated, aimed at bolstering the ruling party's presence in the southwest ahead of leadership elections.
Kim Yong-beom, a presidential policy adviser, highlighted the necessity of finding massive new sites for these clusters, as the existing capital region lacks the capacity for the required expansion. While the specifics of regional allocation are yet to be fully detailed, the emphasis is on creating a second chip cluster of comparable scale to current facilities, addressing both rapidly growing demand and the government's regional development agenda. Samsung and SK Hynix declined to comment on the specific figures ahead of the official announcement.
