South Korea Unveils Massive Semiconductor and AI Investment Projects

By Park Boram

SEOUL, June 29 (Yonhap) -- South Korea stands at a crossroad for a great leap forward in the increasingly competitive semiconductor and artificial intelligence (AI) sectors, President Lee Jae Myung stressed Monday in an event to unveil massive investment projects, including an unprecedented 800 trillion-won (US$519 billion) investment plan by the country's two largest chipmakers.

The massive investment plans by Samsung Electronics Co. and SK Group, the parent group of SK hynix Inc., among others, come under so-called tripolar mega projects aimed at securing what the president has called "absolute competitiveness" in advanced technologies and turning South Korea into an industrial powerhouse in the emerging AI era.

The possibly single-largest investment project to date will focus on three main areas: semiconductor, physical AI and AI data centers, which the president called major pillars in ensuring the country's "great leap forward" in building an industrial powerhouse with unbridgeable supremacy.

"To meet the explosively increasing demand for semiconductors, production bases currently under construction should be completed promptly ... while overwhelming supply capabilities should be secured preemptively through large-scale investment in the southwest region," he told an event at the presidential office to announce details of the investment project.

Existing semiconductor facilities in Yongin and Pyeongtaek, both in the greater capital region, are reaching their limits in capacity, Lee noted, stressing the need to promptly create a new production cluster in the country's southwest region to preemptively secure chip supply capabilities.

A new semiconductor cluster is currently under construction in Yongin, while the latest government-led projects seek to launch an additional cluster in the southwestern Honam region, home to Lee's ruling Democratic Party (DP).

The president also stressed the importance of establishing AI data centers across the country, highlighting the need to facilitate a "virtuous circle" in which data collected by physical AI flows back to data centers to enable industrial innovation.

Lee urged the mobilization of all government and private-sector resources to establish a homegrown AI ecosystem, saying the outcome of the investment project "will determine the future of South Korea for the next 20 to 30 years."

"I will appoint an official directly in charge of this project at Cheong Wa Dae, while I personally oversee the megaproject to ensure prompt implementation," he added.

The president dismissed the opposition bloc's criticism that the project was politically skewed in favor of Honam, the stronghold of Lee's party, insisting that investment decisions by the private firms were not coerced.

"This has a special meaning in that it serves both the need (for the government) to promote balanced development and the corporate demand for a new semiconductor cluster," the president said.

"So what the government needs to do is to mobilize massive government resources, so that the companies can invest with a clearer vision without incurring any losses, unlike concerns held by some that the government is forcing companies to invest while risking losses and dangers to get what the government needs," he added.

Under the project, an additional 81 trillion won will be invested in the central Chungcheong region to turn the area into an advanced semiconductor packaging hub, while the southeastern Daegu and North Gyeongsang regions, the traditional stronghold of the main opposition People Power Party (PPP), will host innovation hubs for semiconductor materials, components and equipment, according to the government.

Lee praised Samsung Electronics Chairman Lee Jae-yong and SK Group Chairman Chey Tae-won as "national heroes," bowing his head to them in a very rarely seen gesture of appreciation from the head of state.

"I dare say that a new history of the Republic of Korea is beginning," Lee said, expressing gratitude to them for making difficult decisions for the future of the country.

The DP, meanwhile, welcomed the planned investment, noting the projects will help South Korea secure new growth engines in the AI industry.

"The DP strongly supports President Lee Jae Myung's bold decision on the projects, which will determine the country's future," Rep. Lee Ju-hee, floor spokesperson of the party, said in a statement.

"The National Assembly will provide proactive support for the establishment of related infrastructure and regulatory reforms," she added.

The PPP, on the other hand, criticized the projects as being politically motivated.

"We are not opposing the establishment of semiconductor factories in Gwangju and South Jeolla Province," PPP floor leader Jeong Jeom-sig said.

"But the fact that the two rival conglomerates announced major investment plans for the same locations indicates the decisions were made under political interventions," Jeong added.