South Korea has announced plans to invest at least $880bn (£666bn) in building out the country's chip manufacturing and artificial intelligence (AI) capabilities over the coming years. The initiative, part of the so-called Three Mega Projects, aims to develop new chip production hubs, data centres, and robotics technology.
President Lee Announces Mega Projects
President Lee Jae-myung stated on Monday that the plan is designed to rejuvenate economies in areas outside the capital Seoul. The announcement comes as regional rivals such as Taiwan, China, and Japan are heavily investing in chip factories and other technologies, driven by the AI boom that is pushing up demand for semiconductors.
“We must secure the core elements of AI faster than any other country,” Lee said. “Semiconductors, physical AI, and AI data centres are the triple axis for a great leap forward.”
Involvement of Major Chipmakers
Lee announced the plans in a televised event alongside the leaders of Samsung and SK Hynix, South Korea's two largest chipmakers. He also unveiled plans to build additional AI infrastructure hubs outside of Seoul, where most of the country's advanced factories are currently concentrated.
Earlier, Lee stated that the project is a matter of “survival” for the country to address the decline in rural areas due to the concentration of industries in Seoul. “Now, we must break this long-standing cycle of discrimination and marginalisation - not only for the sake of justice and equity, but also to ensure sustainable and inclusive growth,” he wrote.
Beneficiaries of AI Spending Surge
Samsung and SK Group, which count AI chip giant Nvidia among their customers, have been some of the biggest beneficiaries of the surge in spending on AI infrastructure. US tech giants including Google, Amazon, and Meta have announced plans to spend $650bn on the technology this year.
SK Hynix's stock market valuation topped $1tn in May, driven by the boom in AI data centres. The surge in demand for chips to power AI has led to a global shortage of semiconductors, sending prices higher. Last week, Apple and Microsoft raised the prices of some of their devices due to higher component costs.
Investor Concerns
However, some investors have raised concerns about the huge amounts of money being poured into AI, which has triggered some shares to slide in recent days.
