South Korea is betting $520 billion that it can turn its underdeveloped southwest into the world's most powerful AI chip manufacturing corridor, with Samsung Electronics and SK Hynix committing to build four new fabrication plants outside the Seoul metropolitan area for the first time. The two companies, which together produce roughly two-thirds of the world's memory chips, said Monday they will invest a combined 800 trillion won ($518 billion) in the plan. President Lee Jae Myung joined Samsung Chairman Lee Jae-yong and SK Hynix Chairman Chey Tae-won in Seoul to announce the initiative, which Lee cast as a "great leap forward" built on semiconductors, physical AI and data centers.
"We must secure the core elements of AI faster than any other country," Lee said in a televised address.
Samsung's new fabs will go to the southwestern city of Gwangju, where experts have proposed sites including the grounds of a military air base slated for relocation. SK Hynix will build two plants in the same region, expanding beyond its existing manufacturing cluster in Gyeonggi Province that took nine years to establish. The geography matters.
South Korea's semiconductor industry has been overwhelmingly concentrated in Gyeonggi Province, just south of Seoul. The southwest lacks major industrial hubs and has historically trailed in economic development. It also happens to be the political base of Lee's liberal Democratic Party, a fact opposition critics have seized on, accusing the government of pressuring chipmakers into a region chosen more for electoral math than industrial logic.
Lee defended the decision on X over the weekend, rejecting claims that it favors a region where 85 percent of voters backed him in last year's presidential election. The companies didn't specify when the new fabs would come online.
Chey Tae-won described the project as a complex, large-scale effort requiring "vast sites, along with sufficient power, water and skilled workers." Government officials said the region's strength in renewable energy would give the chipmakers an edge as global pressure mounts to use cleaner electricity.
Both Samsung and SK Hynix have reported record profits in recent months, fueled by surging investment in data centers and AI infrastructure. Government officials expect AI-driven demand to keep climbing as the technology spreads to industrial robots and autonomous vehicles, and warn that existing chipmaking complexes in Gyeonggi Province may hit capacity sooner than expected.
The broader plan extends beyond the four fabs. Industry Minister Kim Jung-kwan said an additional 81 trillion won ($52.5 billion) will go toward a chip-packaging cluster in the Chungcheong area near Seoul.
Science Minister Bae Kyung-hoon outlined plans for AI data centers backed by 550 trillion won ($356 billion) from SK Group, GS Group and Naver, with a target of building 18.4 gigawatts of capacity by 2035.
"We must establish the core building blocks of artificial intelligence faster than any other country," Lee said. "Semiconductors, physical AI and AI data centers are the three pillars of our next great leap forward."
