SEOUL: Samsung Electronics and SK Hynix plan to invest more than $500 billion in a new chip-making hub in southwestern South Korea, collaborating with the government’s push to bring the artificial-intelligence boom to less-developed regions.
A factory in Ansan, South Korea in April 2026. (REUTERS)
The initiative, announced by the South Korean government Monday, envisions the creation of four new memory chip-making plants in the southwest, diversifying from the two companies’ current production centers which are all in the Seoul region.
“We must secure absolute competitiveness in advanced technologies including semiconductors and AI, and make sure the fruits of this growth are distributed evenly nationwide and felt by all citizens,” said President Lee Jae Myung in a televised address.
SK and Samsung said they would each invest about 400 trillion won, or roughly $260 billion, in the new hub. Samsung said the southwestern city of Gwangju was a likely site for its new factories. Another 81 trillion won, or roughly $53 billion, will be spent on chip-packaging facilities in the central region.
Global demand for memory chips is surging because they are a critical part of AI systems. Prices of memory chips have risen to record levels amid a worldwide shortage. Samsung and SK Hynix, the world’s two largest memory-chip makers, now each boast a market capitalization exceeding $1 trillion.
The chiefs of Samsung and SK Hynix said their existing investments wouldn’t be enough to meet demand. Four leading Silicon Valley hyperscalers—Microsoft, Meta Platforms, Amazon and Alphabet’s Google—together plan to spend as much as $670 billion this year on AI-related capital expenditures.
“A new manufacturing base is needed to meet the memory shortage that’s expected to continue,” said Chey Tae-won, chairman of SK Group, which controls SK Hynix. Chey said the firm was also fast-tracking the building of new memory factories in Yongin and Cheongju, cities that are closer to Seoul.
The investments in the southwest are part of what the government is calling its three megaprojects, aimed at strengthening South Korea’s capabilities in semiconductors, AI data centers and AI-driven robotics.
Some industry critics said the southwestern region—a stronghold for President Lee’s Liberal Party—was too far from the country’s existing chip-making ecosystem, threatening to complicate supply chains. They said some talented engineers and young workers wouldn’t want to relocate so far from the capital.
Lee acknowledged that from a growth and profit perspective, the companies might wish to stay near Seoul. “From the state’s perspective, however, balanced regional development is crucial,” he said, adding that the government would make it worth their while by offering tax incentives and other aid.
