South Korea announces $1 trillion semiconductor and AI ‘megaprojects’ plan

South Korea has announced a $1 trillion “megaprojects” plan for the development of semiconductor manufacturing and artificial intelligence data centres in the country in partnership with Samsung and chip maker SK ​Hynix.

Samsung Electronics and SK Hynix are each planning to build two major chip ​fabrication sites ​in the country’s southwest ⁠region as part of the national project to boost Seoul’s overall semiconductor production "ecosystem".

South Korean president Lee Jae Myung convened a meeting of business leaders and government officials in Seoul to present the projects to the public on Monday.

Investment in building the semiconductor manufacturing hub alone would be 800 trillion won ($519bn), the government said.

Korean conglomerates SK Group, GS Group, and Naver plan to spend $356bn-$500bn to set up AI data centres.

It comes amid increasing investment in AI data centres and chip manufacturing by Asian giants Taiwan, China, and Japan.

Tech giants, including Google, Amazon and Meta also announced plans to invest over $650bn into AI infrastructure earlier this year.

Despite the major announcement, Samsung stocks dropped by four per cent, while SK Hynix lost three per cent of its value over the last 24 hours.

Experts say this could be due to growing concerns among investors about the gap between AI’s long-term promise and what the technology currently delivers.

The Korean president also unveiled a blueprint to foster physical AI as a national strategic industry, adding that the next few years would be a "golden time" for Korea to emerge as the world's leading physical AI powerhouse.

“We need to secure the core elements of artificial intelligence at a faster speed than any other country,” President Lee told reporters.

"Now is the time of a battle where the world's economic landscape is shaking in the so-called era of artificial intelligence, major countries, including the US and China, who want to preempt the new continent of artificial intelligence, are competing for their lives,” he said.

The plan is also aimed at boosting the economies of the southwestern, central and southeastern regions of the country outside Seoul, the president said.

“The metropolitan area is on the verge of explosion, and the provinces are on the verge of extinction,” he said, adding that in contrast, the southwest coast is “rich in water supply, especially renewable energy”.

“So we need to develop a new site with a lot of electricity and water, and a lot of stable and cheap paper,” Mr Lee said.

"We need to combine the capabilities of the government and the private sector to build a Korean-style artificial intelligence ecosystem with a sense of speed by combining semiconductors, physical AI, and artificial intelligence data centres together,” he said.

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