South Korea announces over $500 Billion investment in AI and semiconductor manufacturing

South Korea unveils a $518 billion semiconductor hub in its underdeveloped southwest, with Samsung and SK Hynix each building two fabrication plants. President Lee Jae Myung frames the June 29, 2026 announcement as a national AI race, pledging over $650 billion across chips, data centers, and infrastructure by 2035. The initiative aims to narrow regional disparities, but opposition critics call it politically motivated, noting 85% of the region backed Lee in 2025 as his approval slides to 46.5%.

Southwest semiconductor hub announcement

• ▪President Lee Jae Myung framed the initiative as a "great leap forward" centered on the "triple axis" of semiconductors, physical AI, and data centers
• ▪Samsung Electronics and SK Hynix will each build two new chip fabrication plants in South Korea's southwest region, including Gwangju and South Jeolla province
• ▪South Korean President Lee Jae Myung announced on June 29, 2026, a sweeping industrial strategy focused on semiconductor chips and artificial intelligence projects

Investment scale exceeding $500 billion

• ▪Gwangju city and South Jeolla province will invest 5 trillion to 20 trillion won, equivalent to $3.2 billion to $13 billion, in the semiconductor projects
• ▪By 2035, an additional 10-gigawatt AI data center will be built with a total investment exceeding 18.4 gigawatts and 1,000 trillion won, equivalent to $648 billion, according to Science Minister Bae Kyung-hoon
• ▪A further 81 trillion won, equivalent to $52.5 billion, is expected to be invested for a chip-packaging cluster in the Chungcheong area near Seoul, according to Industry Minister Kim Jung-kwan
• ▪Samsung Electronics and SK Hynix will invest a combined 800 trillion won, equivalent to $518 billion, in building the new computer chipmaking hub in South Korea's southwest region
• ▪Local media reported that the planned investments could exceed 1,000 trillion won, equivalent to $651.41 billion, over the coming years
• ▪The government plans to build AI data centers backed by 550 trillion won, equivalent to $356 billion, in investments from SK Group, GS Group, and Naver

Participating companies Samsung SK Hynix

• ▪SK Hynix Chairman Chey Tae-won said it took nine years for SK Hynix to establish its major manufacturing cluster in Gyeonggi Province
• ▪Samsung Electronics and SK Hynix together produce about two-thirds of the world's memory chips
• ▪Samsung Electronics and SK Hynix have reported record profits in recent months as soaring global investment in data centers and other AI infrastructure has fueled demand for memory chips
• ▪Samsung Electronics and SK Hynix already operate major semiconductor facilities in and around the Seoul metropolitan area
• ▪Samsung's share price has risen more than 430 percent over the past year, with SK hynix's share price up 770 percent

Government infrastructure support measures

• ▪South Korea has pledged to triple spending on AI in 2026, aiming to join the United States and China as one of the world's top AI powers

Regional development strategy

• ▪The announcement marks the government's boldest push yet to align South Korea's AI and chip ambitions with President Lee Jae Myung's pledge to narrow regional disparities and revive economies beyond the Seoul metropolitan area
• ▪President Lee Jae Myung defended the proposed southwestern chip hub in a series of X posts over the weekend, framing it as a "national survival strategy" to ease regional imbalances and expand capacity for the AI era

Political criticism from opposition

• ▪The opposition has criticized the plan, arguing that the government's decision to locate a second semiconductor cluster in Honam, the traditional electoral stronghold of President Lee Jae Myung's liberal Democratic Party, is driven more by regional politics than by industrial logic
• ▪Opposition politicians questioned whether the proposal is politically motivated, given that 85 percent of voters in the southwest region backed President Lee Jae Myung in the 2025 presidential election
• ▪President Lee Jae Myung's approval rating has slid for six weeks to 46.5 percent, according to pollster Realmeter