South Korea has unveiled plans to invest nearly $1.2 trillion in semiconductor manufacturing and artificial intelligence infrastructure, one of the largest industrial expansion programmes in its history as the country seeks to cement its position at the centre of the global AI boom.
President Lee Jae Myung announced the initiative in Seoul, describing technological leadership in artificial intelligence as critical to the country’s long-term economic survival.
“Speed is the only path to survival. We must secure the core elements of artificial intelligence faster than any other nation,” Lee said during the launch of the public-private partnership programme.
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Under the plan, Samsung Electronics and SK hynix will jointly invest about 800 trillion won, equivalent to roughly $520 billion, in a new semiconductor fabrication cluster in the country’s southwest.
Government officials said the project would include four advanced semiconductor fabrication plants, with each company expected to build two facilities.
Industry Minister Kim Jung-kwan said the investment is intended to transform the southwestern region into a new centre for semiconductor production.
“We will develop the southwestern region into a second semiconductor production hub,” he said.
Kim added that approval processes and construction schedules would be significantly accelerated to support rapid capacity expansion.
“Permit approvals and construction timelines will be dramatically shortened to rapidly expand production capacity,” he said.
“Through this, we will maintain an overwhelming market leadership and a decisive technological gap in the memory semiconductor sector.”
The government also unveiled a separate long-term investment programme valued at one quadrillion won, or approximately $650 billion, to expand AI data centre capacity over the next decade.
Science Minister Bae Kyung-hoon disclosed that 550 trillion won would be invested in AI data centres by 2029, while an additional 10-gigawatt AI data centre complex is expected to be developed by 2035.
According to government projections, total planned AI data centre capacity could exceed 18.4 gigawatts, supported by investments surpassing 1,000 trillion won.
The massive spending programme aligns with President Lee’s pledge to promote industrial growth outside the Seoul metropolitan area and reduce long-standing economic disparities between regions.
The proposed semiconductor cluster is expected to be located in the Honam region, encompassing Gwangju and the Jeolla provinces, an area that has historically lagged behind South Korea’s more industrialised southeast.
Economists and industry experts have cautioned that establishing a semiconductor ecosystem outside existing manufacturing centres presents considerable challenges.
Experts say building entirely new production infrastructure could take more than five years, with most skilled workers and suppliers still concentrated around the Seoul metropolitan area.
Analysts also point to the southwest’s abundant renewable energy potential as a key advantage, allowing companies to align expansion efforts with growing commitments to sustainable energy use.
Questions have also emerged over water availability, a critical requirement for semiconductor manufacturing. President Lee recently said assessments suggest the region could supply up to one million tonnes of industrial water daily.
The announcement comes amid growing debate in South Korea over how gains generated by the AI-driven semiconductor boom should be distributed across society.
The semiconductor sector has experienced robust growth in recent years as soaring demand for artificial intelligence infrastructure boosts investment, profits and global competition among major technology companies.
