Two of South Korea’s global semiconductor powerhouses, Samsung Electronics and SK Hynix, unveiled a landmark $518 billion (800 trillion won) investment plan Monday to construct a cutting-edge computer chip manufacturing hub in the country’s underdeveloped southwest, a move directly tailored to meet the explosive growth in chip demand spurred by the global artificial intelligence boom.
The announcement was joined by South Korean President Lee Jae Myung and the executive chairs of both firms, marking a major win for the administration’s policy to spread high-value industrial investment beyond the Seoul metropolitan area — the nation’s current economic and semiconductor core that has long concentrated the country’s industrial wealth. The southwest region has historically lagged in economic development, lacking large-scale advanced industrial hubs, and it is a longstanding political stronghold for President Lee’s liberal Democratic Party.
Together, Samsung and SK Hynix control roughly two-thirds of the global memory chip market, a component that has become indispensable for powering AI data centers, large language models, and next-generation smart devices. Under the new plan, each company will build two new fabrication plants (fabs) in the southwest, expanding their production footprint outside their existing clustered manufacturing complexes in Gyeonggi Province, just south of Seoul. Samsung’s new facilities will be located in the southwestern city of Gwangju, where multiple potential sites have already been identified — including land belonging to a military air base that is scheduled for relocation.
Company leaders have not yet released a firm completion date for the new fabs, noting that large-scale semiconductor manufacturing projects carry massive infrastructure requirements. SK Hynix Chair Chey Tae-won emphasized that developing a major chip cluster is an extraordinarily complex undertaking, noting that the company’s existing major manufacturing base in Gyeonggi Province took nine years to complete. Even so, Chey added that rapid expansion of production capacity is non-negotiable to match the accelerating pace of global demand for AI-grade chips.
Questions have been raised about whether the southwest region can support the massive power and water needs of advanced semiconductor fabs, which require consistent, high-volume utility access to operate. But South Korean government officials have pushed back on these concerns, noting that the region’s robust existing and planned renewable energy capacity will actually give the new hub a competitive advantage. Global chipmakers are facing growing international pressure to decarbonize their manufacturing processes and shift to low-carbon electricity sources, a requirement the new southwest location is positioned to meet.
In recent months, both Samsung and SK Hynix have posted record-breaking profits, driven by the skyrocketing global investment in AI infrastructure, from cloud data centers to AI-enabled industrial hardware. Industry analysts and government leaders project that AI-driven chip demand will only continue to climb as the technology integrates into new use cases, including AI-powered industrial robots and autonomous vehicles. With that growth, experts warn that the companies’ existing Gyeonggi Province facilities could hit maximum production capacity much faster than initially projected.
Alongside the private sector investment announcement, the South Korean government outlined a broader national strategy to build an end-to-end domestic semiconductor ecosystem. Under the plan, existing industrial hubs in the country’s southeast will scale up production of chip components and raw materials, the central Chungcheong region will specialize in advanced chip packaging technologies, and new AI data centers will be distributed across multiple regions nationwide.
Speaking at Monday’s launch event, President Lee emphasized the strategic urgency of the project for South Korea’s long-term economic competitiveness. “We must establish the core building blocks of artificial intelligence faster than any other country. Semiconductors, physical AI and AI data centers are the three pillars of our next great leap forward,” he said.