Samsung plans US$648b South Korea investment over decade to power AI chip boom

SEOUL, June 26 — Samsung Group will pledge on Monday 1,000 trillion won (US$648 billion) in South Korea over the next decade, a media report said, in a sweeping effort to turn a global AI-driven chip boom into a nationwide growth engine.

Top executives from Samsung Electronics and ‌SK Hynix — firms that have reaped huge profits as AI drives relentless demand for chips - will attend a meeting with President Lee Jae Myung and lay out investment plans targeting regions beyond Seoul, the Maeil Business Newspaper said today. 

Samsung’s investment will include spending on AI data centres, batteries and displays as well as a potential 300 trillion won push to build chip factories in the country’s southwest, it said without citing sources.

The initiative underscores how South Korea is racing to convert surging AI-driven chip demand into a broader economic boost beyond Seoul, but infrastructure limits and labour shortages threaten to complicate efforts to redraw the country’s industrial map.

The concentration of the chipmakers’ production facilities in areas around Seoul has long drawn political pressure, and has been amplified by Lee’s push for balanced regional development.

Opposition lawmakers say the plan is politically driven, accusing the government of pressuring companies to invest in the ruling party’s southwestern stronghold ahead of the party’s leadership contest.

The presidential office said it will unveil “three mega-projects” on Monday to drive a national leap forward. Policy adviser Kim Yong-beom added that the plans — spanning semiconductors, AI data centres and robotics — will be outlined jointly by government and industry, with significant investment expected.

Samsung and SK Hynix declined to comment.

Investing beyong Seoul

South Korea has been a central player in and beneficiary ‌of the global AI wave as it dominates global manufacturing of high-end memory chips that are crucial components in AI data centres.

Samsung Group is South Korea’s biggest conglomerate, with chip giant Samsung ⁠Electronics as its crown jewel. Other big firms in the group include battery maker Samsung SDI and ⁠IT services company Samsung SDS.

Kim has said that SK Hynix and Samsung may need to bring forward projects slated for ⁠the 2040s to the mid-2030s because AI-driven memory demand was ⁠growing faster than expected, leaving no room, power ⁠or water in the capital region for expansion.

Further concentration of manufacturing capacity around Seoul risks inflating property prices and widening inequality, he said.

However, some experts question the wisdom of embarking on a chip hub in the southwest.

Securing skilled workers will be extremely difficult in the southwest, “and that will determine whether the project succeeds or fails,” said Kim Tae-yun, a professor of administration at Hanyang University.

“Unless a ⁠truly cutting-edge fab is built, the local economic impact will be limited - it risks becoming little more than a construction project and a real estate boost.”

Regional development

The regional politics surrounding semiconductor investment became a flashpoint ahead of South Korea’s June 3 local elections, and debate over where the next wave of funding should go has intensified as Lee’s government has made AI a core economic policy priority.

Lee’s approval rating has fallen to 51 per cent, the lowest since his inauguration in June last year, Gallup Korea said on Friday.

Candidates across multiple regions have aggressively pitched their areas as the next semiconductor hub. Proposals ranged from a 500 trillion won chip complex in the southwest to expanded clusters in some regions, according to local media.

The debate has also ⁠stirred concern in existing chipmaking cities such as Icheon, where SK Hynix operates major plants and local finances are heavily tied to the company.

“Most of the city’s tax revenue comes from SK’s chip plant, and our welfare depends on it,” said Jo Jun-taek, head of a grassroots group in Icheon.

“If a new cluster ⁠is created, we think SK will likely cut output here and eventually close the plant. That would cause an outflow of people - the city would become a ghost town.”

Lee has promoted ⁠a plan to establish “five regional ⁠hubs and three special self-governing provinces” to counterbalance the dominance of the Seoul area, which accounted for 52.8 per cent of South Korea’s gross regional domestic product in 2024.

The disparity is particularly evident in Gwangju — a key southwestern city with one of the country’s smaller regional economies and below-average per-capita output, according to official data.

Local media have reported that Samsung Electronics is considering Gwangju as a potential investment site.

Lee won 49.42 per cent of the national ‌vote in the June 2025 presidential election, but secured about 85 per cent in Gwangju and neighbouring South Jeolla, election data showed.

The main opposition People Power Party has accused the administration of politicising semiconductor investment.

“Where semiconductor factories are built should be decided by companies, not by the president,” PPP spokesperson Park Sung-hoon said this week. — Reuters