The world's two largest memory chip makers, Samsung and SK Hynix, have announced a joint $518 billion plan to build four new semiconductor fabs in southwestern South Korea, a region that has historically attracted little chip investment. The initiative is part of a broader national program unveiled Monday at a presidential briefing, aiming to position the country as an AI powerhouse.
A three-pronged investment for semiconductors, AI data centers, and physical AI
The plan breaks down into three buckets. The first covers memory chips: $518 billion for four new fabs in the southwest, plus $52 billion for an HBM packaging hub in the central region. The second bucket allocates $356 billion for AI data centers to be built by 2035 by Korean conglomerates such as SK, GS, and Naver. In total, South Korean tech companies have committed over $900 billion to address what has been dubbed RAMageddon, a global memory chip shortage driven by AI expansion.
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President Lee declares 2026 the year to become an irreplaceable industrial power
President Jae Myung Lee said in a televised address that semiconductors, physical AI, and AI data centers form the triple axis for South Korea's next industrial era. He noted that existing facilities in Yongin and Pyeongtaek have reached their limits and urged companies to accelerate investment in the southwest to spread AI wealth beyond the capital. Lee refuted claims of government pressure, stating that decisions reflect companies' own judgment and that the government's role is to create favorable conditions.
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Samsung and SK Group's specific plans
Samsung announced a $1.7 trillion ten-year investment, with $425 billion earmarked for the Honam region, selecting Gwangju for a new chip fab and Haenam for an AI data center. SK Group outlined a $1.4 trillion medium- to long-term roadmap, with $1.1 trillion for semiconductor production expansion and $1 trillion for AI data centers nationwide. SK Hynix will lead the chip expansion, while SK Telecom will build 15 gigawatts of AI data center capacity across the country.
The risk of oversupply and execution challenges
Despite the ambition, doubts remain about execution. Building fabs takes years, and by the time they are ready, demand may have cooled, leading to oversupply and price crashes. For now, the global AI chip supply chain, especially memory, watches to see if South Korea can deliver. For comparison, U.S. tech giants Alphabet, Amazon, Meta, and Microsoft will collectively spend $650 billion on AI infrastructure this year alone. Meanwhile, OpenAI's recent restrictions on European SMEs highlight the critical need for computing power. More on this can be found in the article on OpenAI and European SMEs. For insights on chip scarcity's impact on communication security, see the US reward for Signal and WhatsApp attacks. Broader context on the semiconductor shortage is available on Wikipedia.
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Source: https://techcrunch.com/2026/06/29/south-korean-tech-giants-commit-over-550b-to-ease-ramageddon
