Samsung and SK Hynix to invest $518 billion in 4 new chip sites

South Korea's two largest chipmakers will each build two fabrication plants in the country's southwest, part of a national semiconductor ecosystem valued at 800 trillion won.

Samsung Electronics and SK Hynix plan to each build two chip fabrication sites in South Korea's southwest Honam region, part of a government-backed semiconductor ecosystem valued at 800 trillion won ($518 billion).

"The semiconductor cluster represents a historic achievement for balanced national development," President Lee Jae Myung said at a briefing in Seoul, rejecting claims that the government pressured companies into the investment.

The project, announced Monday, also includes AI data center development in the Chungcheong region and physical AI initiatives in the Yeongnam region. Samsung Chairman Lee Jae-yong and SK Group Chairman Chey Tae-won attended the event. The 800 trillion won valuation, based on an exchange rate of 1,544.80 won per dollar, covers the full production ecosystem spanning fabrication, packaging, and research facilities.

The investment cements South Korea's position in the global chip war against Taiwan, the US, and China, where governments are pouring billions into domestic semiconductor capacity. SK Hynix recently surpassed Samsung as South Korea's most valuable publicly traded company, driven by its leadership in high-bandwidth memory (HBM) chips critical for AI servers.

A separate report from the Korea Economic Daily, citing unnamed sources, suggested the total investment could reach 2,000 trillion won ($1.3 trillion) over the next decade, though the presidential office did not confirm that figure.

Honam Semiconductor Cluster Faces Infrastructure Questions

The Honam region, encompassing Gwangju and South Jeolla Province, received the highest rating in a government competition to designate specialized national high-tech industry zones under the previous administration, Lee said. The opposition People Power Party has questioned the location's feasibility, arguing that semiconductor investment should be driven by access to electricity, water, skilled workers, and supplier networks rather than regional development goals.

"Semiconductors are an ecosystem, not an electoral district," the party said in a statement, calling for an assessment of the Honam region's infrastructure readiness before proceeding.

AI Data Centers and Physical AI Complete the Triad

Beyond fabrication, the government plans to connect semiconductor production with AI data centers in the Chungcheong region and physical AI projects — including robotics and autonomous systems — in the Yeongnam region. This three-region strategy is designed to distribute economic growth beyond the Seoul metropolitan area, which currently hosts the majority of South Korea's advanced industries.

The rapid adoption of artificial intelligence has intensified competition among global chipmakers. Samsung and SK Hynix together control more than 70% of the global memory chip market, and both are racing to expand high-bandwidth memory production capacity. SK Hynix's HBM3E chips are the primary memory solution for Nvidia's AI accelerators, giving the company a dominant position in the fastest-growing segment of the memory market.

For investors, the scale of the commitment signals that Samsung and SK Hynix expect AI-driven memory demand to remain elevated for years. Samsung shares have lagged behind SK Hynix this year as the latter captured the early lead in HBM supply to Nvidia. If Samsung's new fabs accelerate its HBM production ramp, the competitive gap could narrow. Specific investment timelines and financing details are expected to be disclosed at future briefings.

This article is for informational purposes only and does not constitute investment advice.