SouthKoreaBetsonChipsandAIinSweepingIndustrialPush

South Korean President Lee Jae-myung unveiled his administration’s first major industrial strategy during a national briefing at the Blue House on Monday. The initiative positions semiconductors, physical AI and AI data centers as the three strategic pillars meant to serve as the country’s growth engines for the next two to three decades.

“We must make this year the beginning of a new chapter for an irreplaceable South Korea that no other country in the world can substitute,” Lee said during his address. He added that the government will concentrate its resources on propelling the nation into an industrial powerhouse with a super-gap competitive advantage.

Lee noted that semiconductors, physical AI and AI data centers collectively form the three major axes of the nation’s industrial upgrade. The vision involves aggregating data generated on factory floors into AI data centers, which will then be fed back into manufacturing and robotics applications to create a virtuous cycle of physical AI, data centers and industrial innovation.

He also announced the appointment of a direct overseer within the presidential office to supervise the three super projects and accelerate the implementation of related policies, regulations and support measures.

According to the government’s plan, companies including Samsung Electronics Co., SK Hynix Inc., SK Group, GS Group, Naver Corp. and Hyundai Motor Group will launch massive investments across these three domains.

In the semiconductor sector, the administration introduced a 3S+1F strategy, standing for speed, stronghold and spearhead, plus full support. The strategy focuses on advancing the construction of a semiconductor production base in the southwestern Honam region while simultaneously accelerating capacity expansion in the capital region.

Under the blueprint, Samsung and SK Hynix will collectively invest 800 trillion won ($520 billion) in the southwest region to build two front-end memory chip fabrication plants each. The four new fabs will establish the country’s second semiconductor manufacturing hub outside the capital region. This investment amount sets a record for a single project by South Korean private enterprises and exceeds the national government’s entire budget for 2026.

Presidential Chief of Staff Kang Hoon-sik told a post-briefing press conference that the government aims to complete the construction of these fabs within the current administration’s term. Kang expressed hopes of drawing on the experience of Japan’s Kumamoto semiconductor industrial park, aiming to largely establish the basic infrastructure within two years before companies begin factory construction.

Concurrently, South Korea will speed up the development of its capital-region semiconductor base. Samsung plans to shift the construction of phases 1 and 2 of its Pyeongtaek P5 plant from sequential to simultaneous builds, completing the project three to four years ahead of schedule. For the Yongin semiconductor cluster, SK Hynix’s general industrial park is slated for completion in 2033, 12 years earlier than originally planned, while Samsung’s national industrial park is scheduled for completion in 2040, seven years ahead of schedule.

Trade, Industry and Energy Minister Kim Jeong-gwan said South Korea plans to double its memory chip production capacity in the capital region over the next five years. “Our goal is to build the entire country into a semiconductor cluster,” Kim said.

Furthermore, Samsung and SK Hynix plan to invest approximately 81 trillion won in the Chungcheong region to build a high-bandwidth memory packaging base. They will also develop semiconductor materials, components and equipment industries in the southeast and Daegu-Gyeongbuk regions, forming a nationwide semiconductor cluster.

On the physical AI front, the government proposed establishing humanoid robot industrial bases centered in the Saemangeum and Daegu-Gyeongbuk regions, aiming to propel South Korea into the ranks of the world’s top three AI robotics powers.

Hyundai Motor will build a robot foundry and components industrial park in Saemangeum and support auto and home appliance component makers in Daegu and North Gyeongsang province in their transition to the robotics industry. The government also plans to deploy more than 1,000 industry-specific robots annually to accelerate the AI transformation of the manufacturing sector.

AI infrastructure serves as another crucial component of the strategy. Under the plan, SK, GS and Naver will invest roughly 550 trillion won by 2029 to build AI data centers with a total capacity of 8.4 gigawatts in South Korea. By 2035, the government plans to add another 10 gigawatts of computing capacity, bringing the national AI data center capacity to 18.4 gigawatts with a total investment exceeding 1,000 trillion won.

Samsung Electronics Chairman Lee Jae-yong and SK Group Chairman Chey Tae-won attended the briefing to outline their respective corporate long-term investment plans.

Lee said Samsung is comprehensively evaluating conditions such as electricity, industrial water, talent and policy support as it positions Gwangju as a candidate site for its new industrial park. Chey stated that as AI advancements continue to drive up demand for memory chips, SK plans to build a new semiconductor cluster in the southwest region to meet future market needs.

President Lee later returned to the stage, bowing in gratitude to the two corporate leaders. He remarked that enterprises do not merely generate profits but also bear responsibility for the future of the national community, adding that he considers the two chairmen national heroes.

In alignment with the three super projects, the two conglomerates also disclosed mid- to long-term investment roadmaps. Citing corporate disclosures, Reuters reported that Samsung plans to invest 2,450 trillion won domestically between 2026 and 2040, with 2,100 trillion won directed toward semiconductor clusters. SK announced a long-term investment plan of approximately 2,100 trillion won covering sectors such as semiconductors and AI data centers.

The rollout of the three super projects reflects the new industrial policy thinking of the current administration. Since taking office in 2025, Lee has repeatedly identified advanced industries such as AI and semiconductors as South Korea’s new growth engines. He has set targets for the country to become one of the world’s top three AI robotics powers and the leading nation in physical AI by 2030.

However, the three super projects face execution challenges. According to analyses by South Korean media, the announced investment figures and construction schedules are largely mid- to long-term plans. Their success will require sustained corporate investment as well as government support in power supply, industrial water, land development and administrative approvals.

Addressing external skepticism over whether the government strong-armed companies into these commitments, Kang clarified at the press conference that the massive corporate investments stem primarily from shifts in chip demand driven by the continuous evolution of AI rather than administrative pressure.

Kang added that while the semiconductor sector was historically viewed as highly cyclical, the industry now broadly agrees that AI will persistently drive up chip demand. Consequently, South Korea must expand its capacity ahead of time; otherwise, market share could be ceded to rivals like Micron, potentially sapping the country’s future growth momentum.