Bottom line: South Korea is moving aggressively to build the infrastructure behind artificial intelligence, committing vast sums to chips and data centers as it tries to maintain its position in a rapidly evolving tech economy. The government is coordinating roughly 1,350 trillion won (about $880 billion) in planned investments from major companies including Samsung Electronics and SK Hynix. The focus is not just on expanding capacity but on strengthening the broader AI ecosystem, from high-end memory chips to the data centers that power them.
A significant portion of that spending is earmarked for semiconductor manufacturing. Samsung Group and SK Group plan to build two new chip fabrication plants each in the country's southwest, with a combined value of about 800 trillion won. The goal is to rapidly expand capacity as demand accelerates for memory chips that power AI systems, particularly high-bandwidth memory used in intensive computing applications.
At the same time, South Korea is scaling up its data infrastructure. Companies, including Naver, are expected to invest about 550 trillion won to develop 8.4 gigawatts of AI data center capacity by 2029. That level of expansion would enable the country to handle large-scale AI workloads domestically rather than relying on overseas providers.
President Lee Jae Myung has framed the effort in stark terms, tying it directly to the country's economic future. "We're entering an era where the page turns in the blink of an eye," he said during a briefing, where he also referred to Samsung and SK Hynix leaders as "national heroes." He added, "Speed is the only way to survive."
The scale of the investment reflects how central memory technology has become to AI development. South Korea is a leading player in the global memory chip market, but maintaining that position requires continuous reinvestment as technology advances. The total planned spending amounts to roughly 5% of the country's 2024 GDP, based on World Bank data.
Samsung alone has said it will spend more than $70 billion in 2026 to expand production and advance research. Over time, that could put the company in the same spending league as US hyperscalers such as Microsoft and China's planned AI investment initiative, which is reportedly valued at about $295 billion.
Industry leaders say the timeline is tight. "It's a race against time," Samsung Electronics Executive Chairman Jay Y. Lee said at the briefing. The company is accelerating construction of fabs in the Seoul metropolitan area while also developing new regional hubs.
Gwangju is being developed as a center for memory manufacturing, while Cheonan and Onyang will focus on high-bandwidth memory packaging, a critical step in improving chip performance for AI applications.
Samsung is also planning to introduce humanoid robots into its fabrication facilities in Gumi as part of a broader push to automate chip production.
The geographic distribution of these investments is deliberate. The government is trying to shift more high-value industry beyond Seoul, using AI infrastructure to stimulate regional economies and create higher-paying jobs.
President Lee used a post on X to highlight what he sees as the need for a broad, collective effort to address regional imbalances. He described it as a shared national mission, calling on the public to cooperate and contribute ideas to reduce the concentration of economic activity in the capital region and promote more balanced growth nationwide.
At its core, the strategy is a bet that the next phase of AI will be defined as much by access to hardware as by software. By investing simultaneously in chip manufacturing, packaging, and data centers, South Korea is seeking to establish a foothold across the entire AI infrastructure stack that underpins modern AI systems.
South Korea is betting $880 billion that the next AI race will be won in hardware, not software
