South Korea unveils $1.2 trillion AI and chip investment plan

South Korea has announced one of the largest industrial investment programs in history, committing more than $1.2 trillion to semiconductor manufacturing and artificial intelligence infrastructure over the next decade.

President Lee Jae Myung unveiled the sweeping strategy on Monday alongside executives from Samsung Electronics and SK Hynix, the world's two largest memory chip manufacturers. The president framed the initiative as essential to maintaining South Korea's technological leadership in what he called a "great leap forward" centered on semiconductors, physical AI, and data centers.

The investment breakdown

The plan comprises several major components, according to details first reported by Al Jazeera and Reuters. Samsung and SK Hynix will invest 800 trillion won ($518 billion) with their suppliers to construct two new chip fabrication facilities each in South Korea's southwestern region. The government expects an additional 81 trillion won ($52.5 billion) for a chip-packaging cluster in the Chungcheong area near Seoul.

Local governments in Gwangju city and South Jeolla province will contribute between 5 trillion and 20 trillion won ($3.2 billion to $13 billion) to support the semiconductor projects, Industry Minister Kim Jung-kwan said.

On the AI infrastructure side, the SK Group, GS Group, and Naver will back data center construction with 550 trillion won ($356 billion) in investments. Science Minister Bae Kyung-hoon announced plans to build an additional 10-gigawatt AI data center by 2035, bringing total investment to over 1,000 trillion won ($648 billion) and capacity to 18.4 gigawatts.

Why it matters

This investment program represents South Korea's attempt to lock in its position as a critical node in global AI supply chains at a moment when semiconductor demand is surging. By concentrating both chip manufacturing and AI compute infrastructure domestically, Seoul is betting it can capture value across the entire stack—from memory chips that power AI training to the data centers where models run. The scale also reflects intensifying competition with Taiwan, the United States, and China for semiconductor leadership.

Regional politics enter the equation

The decision to locate major semiconductor facilities in South Korea's southwest has drawn political criticism. Opposition parties argue the government is pressuring chipmakers to invest in Honam—the traditional stronghold of Lee's Democratic Party, where he received 85 percent of votes in last year's presidential election—for political rather than commercial reasons.

Lee defended the southwestern location over the weekend in posts on X, emphasizing the region's untapped power resources. The president has positioned the industrial strategy as part of a broader effort to reduce regional economic disparities and spread development beyond the Seoul metropolitan area.

"We must secure the core elements of AI faster than any other country," Lee said in his televised address announcing the plan.

Details of the investment timeline and specific facility locations were first reported by Al Jazeera and Reuters.