SEOUL: South Korea rolled out a sweeping chip and AI megaproject on Monday, with President Lee Jae-myung pledging to invest more than $576 billion over several years and establish overwhelming leadership in the industry.
The announcement marks South Korea’s boldest effort yet to align South Korea’s AI and chip ambitions with his pledge to reduce regional disparities and revitalize the economy outside the Seoul metropolitan area.
Lee attended the televised announcement along with the leaders of Samsung Electronics and SK Hynix, the world’s two largest memory chip manufacturers.
“We must secure the core elements of AI faster than any other country,” the president said. “Semiconductors, physical AI, and AI data centers will be the three pillars of our company’s leap forward.”
He said Samsung and SK Hynix will invest 800 trillion won ($517.87 billion) together with suppliers to build two new chip manufacturing bases each in southwestern South Korea.
Lee said Gwangju City in the southwestern part of the country and Jeollanam Province will also invest between 5 trillion and 20 trillion won in the project, and another 81 trillion won is expected for the chip packaging cluster in Chungcheong region near Seoul.
Mr Lee said the southwest would be home to major chip production clusters that would take advantage of the country’s underutilized power reserves.
“In order to meet the rapidly increasing demand for semiconductors, we need to quickly complete the production base currently under construction,” he said.
“At the same time, we must secure overwhelming production capacity in advance through large-scale new investment, including in the southwest region. Existing bases centered on Yongin and Pyeongtaek have already reached their limits.”
Representatives from other companies, including LG Electronics, HD Hyundai Robotics, Korea Electric Power Corporation and Korea Water Resources Corporation, also attended, according to Lee’s office.
president defends plan
High-bandwidth memory (HBM) chips manufactured by Samsung Electronics and SK Hynix play a pivotal role in the global race to build advanced AI systems. Both companies already operate major semiconductor facilities in and around the Seoul metropolitan area.
South Korea will double its dynamic random access memory (DRAM) production within five years by bringing forward construction of factories in the Seoul metropolitan area to the mid-2030s, Industry Minister Kim Jong-kwang said at an event.
DRAM is a type of memory used to power electronic devices such as laptops and smartphones, and HBM is manufactured by stacking multiple layers of DRAM.
Mr Lee defended the proposed South West chip hub in a series of X posts over the weekend, rejecting criticism that it favored a Liberal stronghold. He framed it as a “national survival strategy” to alleviate regional imbalances and expand capabilities in the age of AI.
“The creation of a semiconductor industry ecosystem in the (Southwest) is not a special benefit to any particular region,” Lee wrote in one post.
“This is the most rational creation of an additional semiconductor industry center through the decisions of related companies, with the full support of the government.”
Industry experts say diversifying chip investments outside of Seoul could ease infrastructure bottlenecks, but warn that building cutting-edge fabs requires massive amounts of power and water, advanced logistics, deep supplier networks and highly skilled labor, and that these factors may not scale quickly enough in new regions to meet surging AI demand.
Opposition politicians have sharply criticized the plan and questioned whether the proposal was politically motivated, given that 85% of voters in the region supported Lee in last year’s presidential election.
The announcement comes as Lee’s approval rating has fallen to 46.5% in six weeks, according to polling firm Realmeter. – Reuters
