South Korean Firms Samsung and SK Hynix Plan $518 Billion Chip Plants in Southwest Region

South Korean companies Samsung Electronics and SK Hynix announced on Monday plans to invest a combined 800 trillion won ($518 billion) to construct new semiconductor fabrication facilities in the southwest of the country. The investment responds to increased demand for memory chips used in artificial intelligence systems.

President Lee Jae Myung attended the announcement with the companies’ chairmen. The project aligns with government efforts to direct investment outside the Seoul metropolitan area, which currently hosts most semiconductor production.

The southwest region has fewer large industrial sites and has recorded lower economic growth metrics compared with other parts of the country. It has also been an electoral stronghold for Lee’s Democratic Party.

Samsung and SK Hynix, which together account for roughly two-thirds of global memory chip output, stated they will each construct two new fabrication plants in the southwest. These facilities will supplement existing plants located in Gyeonggi Province south of Seoul.

Samsung Chairman Lee Jae-yong said the new plants will be sited in Gwangju. Local authorities have identified several candidate locations, including land currently occupied by a military air base scheduled for relocation.

The companies did not provide completion dates for the southwest facilities. SK Hynix Chairman Chey Tae-won described the project as large-scale and noted requirements for extensive land, reliable electricity, water supplies, and trained personnel. He stated that SK Hynix required nine years to develop its Gyeonggi manufacturing cluster. Chey added that expanded capacity is necessary to meet ongoing global demand.

Government officials stated that questions regarding power and water availability in the southwest had been reviewed. They pointed to the region’s renewable energy capacity as an advantage for meeting industry expectations for lower-carbon electricity sources.

Both companies have recorded higher profits in recent reporting periods, linked to increased orders for memory chips from data-center operators and other AI-related projects. Officials and analysts cited by the companies project continued growth in demand as AI applications expand into robotics and vehicle systems. They noted that existing Gyeonggi facilities could reach capacity limits earlier than previously projected.

At the event, officials described plans for a national semiconductor supply network. Existing plants in the southeast would increase output of components and materials, facilities in the central Chungcheong region would focus on packaging, and data centers would be distributed across multiple provinces.

President Lee stated that semiconductors, physical AI systems, and data centers form three central elements of planned national technology development.

The companies and government did not release detailed timelines or final site selections beyond the information provided at the announcement.