Samsung and SK Hynix Commit $648 Billion to Chips and AI in South Korea

The Samsung Group announced a decade-long investment plan of 1,000 trillion won ($648 billion) in South Korea, marking the largest capital commitment by a South Korean company in the nation's history. The formal announcement will take place at the "Korea Great Leap" conference convened by President Lee Jae Myung on Monday, June 29. According to reports published by Reuters on June 25 and confirmed by Digitimes on June 26, the plan encompasses semiconductors, artificial intelligence data centers, batteries, and displays, with a notable allocation of 300 trillion won (approximately $195 billion) dedicated to new chip factories in the southwest of the country. SK Hynix will also present its own investment plans at the same conference.

To put this into perspective: the American Chips and Science Act, the largest federal subsidy program for the semiconductor industry in the United States, has made $52 billion available in incentives. The total commitment from the Samsung Group amounts to approximately twelve times that amount, although it covers sectors beyond chips and spans a duration of ten years.

Why the Southwest and Not the Historic Cluster in Suwon

The concentration of 300 trillion won in Gwangju and the southwest of Korea is not merely an industrial decision. It reflects President Lee Jae Myung's redistributive agenda, which prioritizes economic decentralization beyond Greater Seoul as an explicit political goal. The opposition People Power Party has already declared that "the location of semiconductor factories should be decided by companies, not the president," signaling that execution depends on political continuity, which is not currently guaranteed.

For supply chain executives, this has operational implications: a factory in the southwest region has less mature construction timelines and logistical infrastructure compared to an expansion in the Suwon-Pyeongtaek cluster, where Samsung hosts the largest single-company memory production capacity in the world.

Taiwan, Japan, the U.S.: The Race Remains Open

Samsung competes directly with TSMC, the Taiwanese company that manufactures advanced logic chips for Apple, Nvidia, and AMD. TSMC opened its first factory outside Taiwan in Kumamoto, Japan, in February 2024, with support from the Japanese government, and operates a complex in Phoenix, Arizona, benefiting from the American CHIPS Act. SK Hynix, on the other hand, is building a $3.87 billion complex in West Lafayette, Indiana, to produce HBM (High Bandwidth Memory), the critical component for AI accelerators like Nvidia's H100 and H200.

What Samsung's plan adds to this landscape is not just volume: it is additional pressure on TSMC in the advanced logic foundry segment (3nm and 2nm) and an expansion of South Korea's leadership in high-bandwidth memory. If the construction timeline is met, the increased capacity available from 2028 should translate into some moderation in the prices of accelerators, benefiting hyperscalers and, by extension, the cloud prices of AWS, Google, and Azure.

The Concentration Risk That the Plan Does Not Address

For CIOs specifying AI hardware for corporate data centers, Samsung's plan indicates two simultaneous movements: a gradual decrease in accelerator costs between 2027 and 2028, and an intensification of the geographical concentration of the AI chip supply chain in a single country.

South Korea already holds the majority of global HBM production. An additional expansion by Samsung and SK Hynix in this area, combined with the logic foundry plan in the southwest, consolidates Korea as a central hub for the AI supply chain, creating economies of scale on one hand and systemic vulnerability on the other. For enterprise customers and consultancies advising IT architecture decisions, Samsung's plan is positive for price and timelines, but problematic for supply chain resilience.

India, actively courting Samsung and TSMC to establish factories on its soil as part of its India Semiconductor Mission, interprets the June 29 announcement as a signal that Korean industrial capital will prioritize Korea. The trend emerging is not one of global diversification in the semiconductor supply chain; rather, it is an acceleration of concentration in rival national clusters, where most developing markets, including Brazil, observe as condition takers, not decision-makers.