South Korea Bets Its Next Decade on the Chips That Feed AI

SEOUL — Standing alongside the chairmen of South Korea's two largest conglomerates on Monday, President Lee Jae-myung framed the country's ambitions in the language of national survival. “We must secure the core elements of AI faster than any other country,” he said, describing semiconductors, AI data centres and “physical AI” as the “triple axis for our great leap forward.”

The setting was the unveiling of what Seoul calls three interlocking “mega-projects,” anchored by a commitment from Samsung Electronics and SK Hynix to invest roughly 800 trillion won — about $580 billion — alongside their suppliers in new memory-chip plants. Folded together with the data-centre and robotics components, Korean media put the decade-long programme at close to $1.2 trillion, a sum equivalent to more than two-thirds of the country's annual economic output.

By the government's own account it is the largest corporate investment pledge in the nation's history. It is also a clear strategic wager: that the next phase of the technology cycle will be won not by whoever writes the cleverest models, but by whoever controls the silicon beneath them.

Why memory suddenly looks strategic

The bet rests on a single, unglamorous component. High-bandwidth memory, or HBM, is the stacked chip that shuttles data to the processors training and running large AI systems. Without enough of it, the most advanced accelerators sit idle. Samsung and SK Hynix together supply roughly 80 percent of the world's HBM, a near-duopoly that has turned two Korean firms into gatekeepers of the AI build-out.

That position has translated into a supply squeeze that the companies themselves admit they cannot quickly fix. Demand has run so far ahead of capacity that even an investment of this size is framed as a way to catch up rather than get ahead.

“Demand visible as of today remains solid. Even if investment continues, it will be difficult to fully resolve the supply shortage,” said SK Group chairman Chey Tae-won.

A cluster moves south

The geography of the plan is as deliberate as its scale. Samsung and SK Hynix will each build two new fabrication plants in the country's southwest, the Honam region around Gwangju and South Jeolla, while a separate packaging hub worth 81 trillion won rises in Chungcheong. The established clusters at Yongin and Pyeongtaek, Lee said bluntly, have “already reached their limits” on land, power and water.

Pushing high-value industry beyond the capital region serves Lee's promise to narrow South Korea's stark regional divide, and opposition figures were quick to note that the chosen provinces are political strongholds. The build also carries a heavy energy bill: the AI data-centre component targets some 8.4 gigawatts of capacity in a first phase, with Amazon Web Services adding about $4.9 billion of its own through 2031.

• Two new Samsung fabs and two new SK Hynix fabs in the southwest.
• An 81-trillion-won HBM packaging hub in Chungcheong.
• Timelines for the Yongin cluster brought forward by years, with SK Hynix's site now due around 2033.
• Humanoid-robot deployment targeted by 2028 under the “physical AI” strand.

What it means beyond Korea

For the rest of the world, the announcement is a reminder of how concentrated the AI supply chain has become. The hardware that European and American firms need to compete is, at its most critical layer, made in two countries by a handful of companies. Europe's own response, the EU Chips Act, has struggled to mobilise capital at anything approaching this scale, leaving the continent dependent on Korean memory just as its data-centre demand accelerates.

Whether South Korea can absorb a commitment this large — with the power, water and skilled labour it implies — is the open question. Samsung chairman Lee Jae-yong offered the reassurance of a company that has bet big before. “Samsung will work to help the Korean semiconductor industry maintain its technological edge,” he said. The country has now staked a decade on making good on it.