South Korea is set to pour nearly $1.2 trillion into a new semiconductor hub and AI data centres over the coming years, in a massive public-private push to capitalise on surging global demand while lifting long-neglected regions of the country.
President Lee Jae Myung unveiled the plan at a Seoul event on Monday, framing it as an existential race. “Speed is the only path to survival. We must secure the core elements of artificial intelligence faster than any other nation,” he said.
At the heart of the announcement is an 800 trillion won (about $520 billion) investment by Samsung Electronics and SK Hynix in a new semiconductor fabrication hub in the country’s southwest. Each company will build two plants under the project, Industry Minister Kim Jung-kwan said, with permit approvals and construction timelines to be fast-tracked to ramp up production capacity rapidly.
Both chipmakers have seen profits and share prices surge in recent months as fierce demand for AI infrastructure tightens the global supply of memory chips — a market South Korean firms dominate.
The government separately announced a quadrillion won (around $650 billion) commitment to AI data centres over the next decade. Science Minister Bae Kyung-hoon said 550 trillion won would go toward data centres by 2029, with an additional 10-gigawatt facility to follow by 2035, bringing total AI data centre investment beyond 1,000 trillion won.
The southwestern Honam region — covering Gwangju and the Jeolla provinces — will anchor the new semiconductor hub. The area, a traditional liberal stronghold, has historically lagged behind the more industrialised southeast, a gap dating to the rapid economic development drive under former President Park Chung-hee in the 1960s and 70s. President Lee has made regional development a core policy plank.
But the ambition has drawn caution from experts. Kim Dae-jong, a business professor at Sejong University, warned that without strong incentives for companies to relocate willingly, the plan risks backfiring and undermining South Korea’s semiconductor competitiveness. “It is essential to minimise the financial burden, amounting to hundreds of trillions of won, as well as the time-related risks faced by companies,” he said.
Others flagged structural hurdles. Lee Jong-hwan, a semiconductor engineering professor at Sangmyung University, noted that building a new manufacturing ecosystem from scratch away from the Seoul industrial base could take more than five years. “The biggest challenge is that most skilled workers and suppliers remain concentrated around the Seoul metropolitan area,” he said.
Analysts acknowledge the southwest has strong renewable energy potential, which could help companies meet green commitments, but note that developing an entirely new supply chain will demand substantial time and capital.
Water supply has also emerged as a concern. President Lee addressed the issue over the weekend, writing on X that assessments show the region can supply up to one million tonnes of industrial water per day.
The investment drive comes as South Korea debates how the windfall from the AI-driven semiconductor boom should be shared more broadly. The president’s chief policy secretary suggested in May that excess AI-related tax revenues could fund youth startup support, basic income for rural and fishing communities, and aid for artists. Meanwhile, labour tensions have simmered: Samsung averted a major strike in May after reaching a bonus agreement with its largest union.
READ ALSO:
- NDLEA Nabs 67-Year-Old UK-Based Grandma With 13kg Cocaine Hidden In Fake Plantains
- FCMB Records N177.3bn Profit, Shareholders Approve N23bn Dividend
- Tinubu Reaffirms Commitment to Religious Harmony, Says He Looks Forward to Hosting Pope Leo XIV
- SERAP demands Akpabio, Abbas explain ₦1.3bn budgeted for ‘fictitious’ council
- PFIPC Scandal Deepens as Presidency Alleges Insider Collusion, Orders DSS, Police, EFCC Probe
