South Korea unveils $1tn chip and AI investment plan

South Korea has announced a roughly $1tn investment plan to expand its semiconductor manufacturing and artificial intelligence infrastructure, aiming to build new chip production hubs, data centres, and robotics technology outside the capital Seoul [1]. President Lee Jae-myung detailed the so-called Three Mega Projects during a televised event alongside leaders from Samsung and SK Hynix, the country's two largest chipmakers [1]. The companies are expected to construct a semiconductor manufacturing hub in the south-west of the country, while additional AI infrastructure hubs are planned for other regions beyond Seoul, where most advanced factories are currently concentrated [1]. "Semiconductors, physical AI, and AI data centres are the triple axis for a great leap forward," Lee said [1]. The initiative arrives as regional competitors Taiwan, China, and Japan are also pouring capital into chip factories and related technologies [1]. China has rapidly developed its science and technology sectors from the 1980s onward through state-backed programs such as the 863 Program and the "Strategy to Revitalize the Country Through Science and Education" [2]. SK Hynix, one of the "Big Three" memory manufacturers alongside Samsung Electronics and Micron, counts Nvidia, Microsoft, and Apple among its major customers [5]. The company is a leading producer of High Bandwidth Memory (HBM), a critical component for AI accelerators [6]. HBM was first produced by SK Hynix in 2013, and the JEDEC industry body formally adopted the HBM4 standard in April 2025 [6]. Unprecedented demand from the AI sector has caused DRAM prices to experience compounded increases, some exceeding 200%, since early 2025, as HBM production crowds out commodity memory capacity [6]. Lee framed the investment as a matter of "survival" for addressing the decline of rural areas caused by industrial concentration in Seoul [1]. "Now, we must break this long-standing cycle of discrimination and marginalisation - not only for the sake of justice and equity, but also to ensure sustainable and inclusive growth," he wrote in a statement [1]. US technology giants including Google, Amazon, and Meta have said they will spend $650bn on AI infrastructure this year [1]. SK Hynix's stock market valuation topped $1tn in May, driven by the boom in AI data centres [1]. The surge in chip demand has contributed to a global semiconductor shortage and pushed component prices higher, prompting Apple and Microsoft to raise prices on some devices last week [1].