Samsung, SK Hynix to invest $518 billion in South Korea chip hub

Samsung Electronics and SK Hynix announced an 800 trillion won semiconductor hub in South Korea's south-west. The project links AI-driven chip demand with Seoul's push for more balanced regional growth.

In Short

• President Lee backed the project to spread industry beyond Seoul
• Each company plans two fabs, adding capacity outside Gyeonggi Province
• Officials said renewable energy could help power cleaner semiconductor production

South Korean technology giants Samsung Electronics and SK Hynix said on Monday that they will invest a combined 800 trillion won (USD 518 billion) to build a new computer chipmaking hub in the country’s south-west, as they look to meet rising demand driven by artificial intelligence.

President Lee Jae Myung joined the companies’ chairmen to announce the plan, which is in line with the government’s push to expand investment beyond the greater Seoul metropolitan area, the country’s economic centre and the heart of its semiconductor industry. The south-west has been a particular focus as it lacks major industrial hubs and has historically lagged in economic development.

Samsung and SK Hynix, which together produce about two-thirds of the world’s memory chips, said they will each build two fabrication plants in the south-west, expanding beyond their existing manufacturing complexes in Gyeonggi Province, south of Seoul. Samsung Chairman Lee Jae-yong said the company’s new fabs will be built in the south-western city of Gwangju, where experts have suggested several possible sites, including the grounds of a military air base that is set to be relocated.

The companies did not say when the new fabs would be completed. SK Hynix Chairman Chey Tae-won said the project would be a complex and large-scale effort requiring “vast sites, along with sufficient power, water and skilled workers”. He said it took nine years for SK Hynix to establish its major manufacturing cluster in Gyeonggi Province, but added that a major expansion of manufacturing facilities is needed for the company to keep pace with global demand.

Government officials dismissed questions about whether the south-west has enough power and water to support large semiconductor plants. They said the region’s strength in renewable energy would give the chipmakers an advantage as they face growing global pressure to use cleaner sources of electricity. Samsung and SK Hynix have reported record profits in recent months as strong global investment in data centres and other AI infrastructure has lifted demand for memory chips.

Officials and business experts expect AI-led demand to keep rising as the technology spreads to AI-powered industrial robots and autonomous vehicles. They said the chipmakers’ existing semiconductor complexes in Gyeonggi Province may reach capacity sooner than expected. At Monday’s event, government officials also outlined plans for what they called a nationwide semiconductor ecosystem, with existing manufacturing hubs in the south-east expanding production of chip components and materials, the central Chungcheong region focusing on chip packaging, and data centres being built across the country. “We must establish the core building blocks of artificial intelligence faster than any other country. Semiconductors, physical AI and AI data centres are the three pillars of our next great leap forward,” the president said.

With PTI Inputs

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