South Korea Bets $576 Billion on AI Chips, Tapping Samsung and SK Hynix to Cement Its HBM Lead

South Korea Bets $576 Billion on AI Chips, Tapping Samsung and SK Hynix to Cement Its HBM Lead

SEOUL — Standing alongside the chairmen of the world's two largest memory-chip makers, South Korean President Lee Jae Myung on Monday unveiled the most ambitious industrial gambit of his young presidency: a sweeping package of semiconductor and artificial-intelligence projects worth more than $576 billion, designed to lock in the country's grip on the chips that power the global AI boom.

The televised announcement, made at Yeongbingwan inside the Blue House complex in Seoul, framed the spending as nothing less than a national mission. "We must secure the core elements of AI faster than any other country," Lee told the gathering, which included Samsung Electronics Chairman Jay Y. Lee and SK Hynix Chairman Chey Tae-won. "Semiconductors, physical AI, and AI data centres are the triple axis for our great leap forward."

At the heart of the plan sit Samsung and SK Hynix, the two firms that between them dominate the market for high-bandwidth memory, or HBM — the stacked memory chips that sit beside Nvidia's accelerators and have become one of the most coveted components in the AI supply chain. The two companies, along with their suppliers, will invest 800 trillion won, or roughly $518 billion, to build two new chip-fabrication plants each in the country's southwestern region, the president said.

What's in the package

The 800 trillion won committed by Samsung and SK Hynix forms the bulk of the headline figure, but the government layered additional investment on top. Lee said the southwestern city of Gwangju and South Jeolla province would together put 5 trillion to 20 trillion won into the projects, with a further 81 trillion won earmarked for a chip-packaging cluster in the Chungcheong region near Seoul — a nod to the growing importance of advanced packaging in squeezing more performance out of AI silicon.

Beyond the cash, Seoul pledged an extensive support apparatus: measures covering power, water, land, infrastructure, workforce training and housing to stand up the new fabs. Lee argued the underdeveloped southwest was well suited to host the clusters because of its "abundant underutilised power" — a pointed reference to the enormous electricity demands of leading-edge chip plants and the data centers they feed.

The chairmen offered differing levels of commitment. Samsung's Jay Y. Lee selected Gwangju as the site for his company's new chip cluster, while SK Hynix's Chey Tae-won said his firm needed more time to finalize its location in the southwestern region. Both companies already operate their main semiconductor complexes in and around the Seoul metropolitan area, making the southwestern build-out a significant geographic bet.

"To meet the rapidly increasing demand for semiconductors, we need to quickly complete the production hubs that are currently under construction," Lee said.

Why HBM makes this different

South Korea is not simply chasing the AI wave — in one crucial respect, it already owns a piece of it. Samsung and SK Hynix together command the lion's share of the global HBM market, and SK Hynix in particular has become Nvidia's key memory partner for its most advanced AI processors. Because no high-end AI accelerator ships without HBM, the two Korean firms occupy a chokepoint that even the most aggressive rivals cannot easily route around.

That gives Lee's plan a different character from the subsidy-driven catch-up efforts seen elsewhere. The United States has poured tens of billions into reshoring fabrication through the CHIPS Act and lured Taiwan's TSMC to Arizona; China continues to plow state money into domestic chipmaking despite tightening U.S. export controls; and TSMC remains the undisputed leader in the logic chips that do AI's heavy computation. South Korea's wager is to defend and extend the one corner of the stack it already leads — memory — while using state muscle to push into the adjacent territory of data centers and "physical AI," or robotics.

The stakes are national as much as commercial. Semiconductors are South Korea's single largest export category, and the AI build-out has made the country, in effect, a structural winner of the spending frenzy gripping hyperscalers worldwide. By concentrating fab capacity, packaging and AI infrastructure into a coordinated program, Seoul is trying to ensure the value created by that boom is captured at home rather than bled to foundries and equipment makers abroad.

The politics — and the risks

The announcement was not without controversy. Opposition politicians sharply criticized the decision to anchor the chip hub in the southwest, questioning whether the choice was politically motivated given that 85% of voters in the region backed Lee in last year's presidential election. The president pushed back over the weekend in a series of posts on X, casting the plan as a "national survival strategy" rather than regional favoritism.

"The creation of a semiconductor industrial ecosystem in (the southwest) is not a special favour for a particular region," Lee wrote. "It is the additional creation of the most rational semiconductor industrial centre through the decisions of relevant companies under full government support."

Industry experts cited by Reuters cautioned that diversifying chip investment beyond Seoul could ease infrastructure bottlenecks but warned that cutting-edge fabs require vast electricity and water, advanced logistics, deep supplier networks and highly skilled labor — elements that may not scale quickly enough in a new region to meet surging AI demand. The political timing is delicate, too: Lee's approval rating has slid for six straight weeks to 46.5%, according to pollster Realmeter, leaving him with thinner reserves of capital to spend on a multi-year industrial project.

What to watch next

The immediate question is when SK Hynix names its southwestern site and how quickly ground breaks on the four planned fabs — timelines that will determine whether Seoul's vision survives contact with the realities of power, water and permitting. Watch, too, for how the 81 trillion won packaging cluster develops, since advanced packaging is where much of the next round of AI-performance gains will be won. And keep an eye on the global backdrop: any softening in HBM demand, a shift in Nvidia's roadmap, or fresh export-control turbulence between Washington and Beijing could reshape the calculus behind a bet this large. For now, South Korea has made its intentions unmistakable — it intends to hold the memory crown, and is willing to spend more than half a trillion dollars to do it.