South Korea bets $900B to become an irreplaceable AI power

South Korean technology companies have committed to spend over $900 billion on artificial intelligence and the resulting demand for chips. The massive capital injection is aimed at positioning the country as an irreplaceable industrial power by 2026, amid a worldwide shortage of memory chips caused by the AI buildout—a phenomenon known as “RAMageddon.” Currently, South Korean companies Samsung and SK Hynix, alongside U.S. memory chip maker Micron, are experiencing demand driven by this shortage.

Unveiled during a presidential briefing on Monday, the national investment plan spans semiconductors, physical AI, and AI data centers. The commitments are structured into three primary buckets:

• Memory semiconductor fabrication plants (fabs): Samsung and SK Hynix plan to invest $518 billion (~800 trillion won) to build four new memory fabs in southwestern South Korea, a region that has historically seen little semiconductor investment.
• High bandwidth memory (HBM) packaging: The companies have earmarked $52 billion for an HBM packaging hub in the country’s central region.
• AI data centers: South Korean tech and energy conglomerates, including SK Group, GS, and Naver, plan to spend $356 billion (550 trillion won) on AI data centers through 2035.

President Jae Myung Lee stated on Monday that existing chip facilities in Yongin and Pyeongtaek, which form the semiconductor belt south of Seoul, have “already reached their limits.” Lee urged expansion in the southwest to distribute AI wealth beyond the capital, stating, “Semiconductors, physical AI, and AI data centers are the triple axis for South Korea’s next industrial era.” He clarified that the government did not pressure companies, noting the decisions reflected their own judgment. To support this, Samsung plans to invest 2,655 trillion won ($1.7 trillion) over the next decade, earmarking 425 trillion won for the southwestern Honam region, including a new fab in Gwangju and an AI data center in Haenam. Meanwhile, SK Group outlined a 2,100 trillion won ($1.4 trillion) roadmap, allocating 1,100 trillion won to expand semiconductor production capacity and 1,000 trillion won for AI data centers nationwide, with its subsidiary SK Telecom leading the buildout of 15 gigawatts of data center capacity.

The scale of South Korea’s domestic push rivals the massive infrastructure spending of U.S. tech giants. Reuters reported that U.S. tech giants Alphabet, Amazon, Meta, and Microsoft will collectively spend $650 billion on AI infrastructure this year. However, the long-term success of South Korea’s plan depends on navigating volatile demand cycles. Because semiconductor fabs take years to build, the country risks facing oversupply and crashing prices if the current surge in AI demand ebbs before the new facilities are operational.

Why it matters

This massive capital injection aims to secure South Korea’s position in the global AI supply chain, directly addressing the “RAMageddon” memory shortage while attempting to decentralize the nation’s semiconductor industry away from the capital.