By Joyce Lee
SEOUL, June 29 (Reuters) – South Korea rolled out sweeping chip and AI mega-projects on Monday, as President Lee Jae Myung pledged to cement overwhelming industry leadership with investments worth more than $576 billion over several years.
The announcement marks Lee’s boldest push yet to align South Korea’s AI and chip ambitions with his pledge to narrow regional disparities and revive economies beyond the Seoul metropolitan area.
Lee was joined by the leaders of Samsung Electronics and SK Hynix, the world’s two largest memory chipmakers, for the televised announcement.
“We must secure the core elements of AI faster than any other country,” the president said. “Semiconductors, physical AI, and AI data centres are the triple axis for our great leap forward.”
Samsung and SK Hynix will invest 800 trillion won ($517.87 billion) with suppliers to build two new chip fabrication sites each in South Korea’s southwest region, he said.
Lee said the country’s southwestern city of Gwangju and South Jeolla province will also invest 5-20 trillion won in the projects, with a further 81 trillion won expected for a chip packaging cluster in the Chungcheong area near Seoul.
Lee said the southwest will host major chip production clusters, drawing on abundant, underused power.
“To meet the rapidly increasing demand for semiconductors, we need to quickly complete the production hubs that are currently under construction,” he said.
“At the same time, we must secure overwhelming production capacity in advance through large-scale new investments, including in the southwestern region. Existing sites centred around Yongin and Pyeongtaek have already reached their limits.”
Representatives of other firms including LG Electronics, HD Hyundai Robotics, Korea Electric Power Corp and Korea Water Resources Corp also attended, Lee’s office said.
PRESIDENT DEFENDS THE PLAN
High-bandwidth memory (HBM) chips produced by Samsung Electronics and SK Hynix have become pivotal in the global race to build advanced AI systems. Both companies already operate major semiconductor facilities in and around the Seoul metropolitan area.
South Korean industry minister Kim Jung-kwan said at the event the country will double dynamic random-access memory (DRAM) output within five years by bringing forward construction of fabs in the Seoul metropolitan area to the mid 2030s.
DRAM is a type of memory that is used to power electronics such as laptops and smartphones and HBM is produced by stacking multiple layers of DRAM.
Lee defended the proposed southwest chip hub in a series of X posts over the weekend, rejecting criticism that it favours a liberal stronghold. He framed it instead as a “national survival strategy” to ease regional imbalances and expand capacity for the AI era.
“The creation of a semiconductor industrial ecosystem in (the southwest) is not a special favour for a particular region,” Lee wrote in one post.
“It is the additional creation of the most rational semiconductor industrial centre through the decisions of relevant companies under full government support.”
Industry experts say diversifying chip investment beyond Seoul could ease infrastructure bottlenecks, but warn that building cutting-edge fabs requires vast electricity and water, advanced logistics, deep supplier networks and highly skilled labour – elements that may not scale quickly enough in a new region to meet surging AI demand.
Opposition politicians have sharply criticised the plan, questioning whether the proposal is politically motivated given that 85% of voters in the region backed Lee in last year’s presidential election.
The announcement comes as Lee’s approval rating has slid for six weeks to 46.5%, according to pollster Realmeter.
($1 = 1,544.3800 won)
($1 = 1,538.0000 won)
(Reporting by Joyce Lee, Heejin Kim, Brenda Goh, Hyunjoo Jin, Heekyong Yang; Additional reporting by Cynthia Kim, Jihoon Lee, Jack Kim; Editing by Shri Navaratnam)
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