South Korea has introduced its new industrial strategy, centred on semiconductors and artificial intelligence (AI), with President Lee Jae Myung unveiling over USD 576 billion in chip investment to secure global dominance and rebalance growth.
The plan, anchored by Samsung Electronics and SK Hynix, marks the Lee administration’s boldest push yet to align the Asian giant’s AI and chip ambitions, through which the South Korean president has pledged to narrow regional disparities, apart from reviving economies beyond the Seoul metropolitan area.
In the presence of the chiefs of the world’s two biggest memory chipmakers, Lee cast the initiative as a “great leap forward”, centred on the “triple axis” of semiconductors, physical AI and data centres.
“We must secure the core elements of AI faster than any other country,” the president said in a televised address.
As per the industry minister Kim Jung-kwan, Samsung and SK Hynix will invest 800 trillion won (USD 518.30 billion) to build two new chip fabrication sites each in the country’s southwest region.
“The southwestern city of Gwangju and South Jeolla province will also invest 5-20 trillion won in the projects. A further 81 trillion won is expected for a chip packaging cluster in the Chungcheong area near Seoul,” Lee said, while addressing the country.
“To meet the rapidly increasing demand for semiconductors, we need to quickly complete the production hubs that are currently under construction. At the same time, we must secure overwhelming production capacity in advance through large-scale new investments, including in the southwestern region. Existing sites centred around Yongin and Pyeongtaek have already reached their limits,” he added further.
The southwest part of South Korea will host major chip production clusters, drawing on abundant, underused power.
As per the industry experts, diversifying chip investment beyond Seoul could ease infrastructure bottlenecks. However, they also warned about building cutting-edge fabs requiring vast electricity and water, along with advanced logistics, deep supplier networks and highly skilled labour – elements that may not scale quickly enough in a new region to meet surging AI demand.
“To execute something of this magnitude properly requires an extraordinary amount of deliberation. I am sure there has been extensive internal review, but from the outside, it still appears to be moving too fast. It would be ideal if demand remained strong for the next 20 or 30 years, but no one can know that with certainty…If demand were to decline, the consequences would be severe,” said Lee Jong-ho, a professor at Seoul National University’s Department of Electrical and Computer Engineering, while interacting with Reuters.