South Korea, Samsung and SK Hynix unveil $590bn chip and AI mega-projects
President Lee Jae Myung announced three 'mega-projects' to build chip plants, AI data centres and robotics hubs, with Samsung and SK Hynix committing to massive investments in the country's southwest.
The three mega-projects
On Monday, President Lee Jae Myung unveiled the "Three Mega Projects for the Great Leap Forward" at a televised event in Seoul, flanked by Samsung Electronics chairman Jay Y. Lee and SK Group chairman Chey Tae-won. The initiative targets semiconductors, AI data centres and physical AI, including robotics. Lee described the plan as a "national survival strategy" to secure leadership in the AI era.
We must secure the key elements of artificial intelligence faster than any other country. Semiconductors, physical AI and AI data centres are the three pillars for our great leap forward.
The government said the package responds to aggressive fab construction by competitors and rapidly growing demand. Ministries covering industry, science, climate and transport will provide policy support for power, water, land, infrastructure, workforce training and housing.
Investment breakdown
Samsung and SK Hynix, the world's two largest memory chipmakers, will each build two new fabrication plants in the southwestern region, including Gwangju and South Jeolla province. The combined government and corporate investment totals 911 trillion won ($590 billion), according to the Financial Times.
- Chip plants (southwest)
- 800 trillion won
- Packaging cluster (central)
- 81 trillion won
- R&D (next-gen chips)
- 30 trillion won
Of that, 800 trillion won goes to the four chip plants, 81 trillion won to a chip packaging cluster in the central region, and 30 trillion won over 15 years for next-generation memory chips, on-device AI chips and defence semiconductors. Local media reports had earlier suggested the total could reach 1,000 trillion won or even 2,000 trillion won over a decade, but Monday's announcement focused on the initial package.
Export boom and market concentration
The investment push comes as South Korean exports surge. A Reuters poll of 13 economists forecasts June exports jumped 61.0% from a year earlier, the strongest growth since October 1978. In the first 20 days of June, semiconductor shipments soared 188.4%, pushing chips to 41.2% of total exports. The trade surplus is expected to hit a record $32.58 billion.
With chip prices climbing and token usage at the world's major language models rising, the strong run in memory chip exports looks set to continue.
The boom has concentrated the Kospi index: Samsung and SK Hynix now account for a record 60% of its value, the Wall Street Journal reported, raising concerns about market volatility.
Political framing and regional balance
Lee has framed the southwest chip hub as a way to narrow regional disparities and revive economies outside the Seoul metropolitan area. In a series of posts on X over the weekend, he rejected criticism that the plan favours a liberal stronghold, calling it a "national survival strategy" to expand capacity for the AI era.
The creation of a semiconductor industrial ecosystem in (the southwest) is not a special favour for a particular region. It is the additional creation of the most rational semiconductor industrial centre.
The event was attended by representatives from LG Electronics, HD Hyundai Robotics, Korea Electric Power Corp and Korea Water Resources Corp, signalling broad industrial coordination.
Global AI demand and chip shortages
The world's five largest AI companies are expected to spend more than $1 trillion on data centres in 2025 and 2026, the FT noted, driving memory chip prices higher. Last week, Apple raised MacBook and iPad prices, citing the "unsustainable" cost of memory and storage. Samsung and SK Hynix together hold nearly 80% of the global market for high-bandwidth memory chips, which are critical for AI applications. Their combined market capitalisation now stands at roughly $2 trillion.
