South Korea Unveils $1.2 Trillion Investment in AI and Semiconductor Expansion
South Korea has announced plans to invest nearly 1.6 quadrillion won (about $1.2 trillion) in artificial intelligence infrastructure and semiconductor manufacturing over the coming years, as the country positions itself to capitalise on the global AI boom and strengthen economic development beyond the capital region. President Lee Jae Myung unveiled the ambitious public-private initiative, describing speed and innovation as critical to maintaining South Korea's competitive edge in the rapidly evolving AI industry. Under the plan, Samsung Electronics and SK hynix will jointly invest 800 trillion won (approximately $520 billion) to develop a major semiconductor production hub in the country's southwest. The project will include four advanced fabrication plants, with each company constructing two facilities to expand memory chip production.
The government will separately commit one quadrillion won (around $650 billion) over the next decade to build large-scale AI data centres nationwide. Authorities aim to invest 550 trillion won by 2029, with plans to expand total AI data centre capacity to 18.4 gigawatts by 2035, including a new 10-gigawatt facility. Officials said the initiative is designed to transform the traditionally underdeveloped Honam region, comprising Gwangju and the Jeolla provinces, into South Korea's second major semiconductor manufacturing base. The government also pledged to fast-track approvals and construction to accelerate production capacity and maintain the country's leadership in the global memory chip market. Experts, however, cautioned that establishing a new semiconductor ecosystem outside the Seoul metropolitan area presents significant challenges. They noted that most skilled workers, suppliers and supporting industries remain concentrated around the capital, while building new production lines could take more than five years. Concerns have also been raised over the enormous financial commitment and the region's demand for industrial water. President Lee said assessments indicate the southwest can supply up to one million tonnes of industrial water daily to support future operations. The investment comes as South Korea benefits from soaring global demand for AI technologies, with Samsung Electronics and SK hynix reporting strong profits driven by increasing demand for advanced memory chips. The government believes the expansion will not only reinforce the country's technological leadership but also create jobs, attract investment and stimulate long-term regional economic growth.
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