South Korea Unveils $1 Trillion AI and Chip Investment Plan
South Korea has announced one of the largest technology investment packages in history, unveiling a sweeping national strategy worth approximately 1,800 trillion won (over €1 trillion / $1.17 trillion) to cement its position as a global leader in artificial intelligence and semiconductor manufacturing. President Lee Jae-myung presided over the announcement at Cheong Wa Dae on Monday, framing the initiative as a matter of national survival in an intensifying global technology race.
The Three Mega Projects
The plan, dubbed the “Three Mega Projects,” is organized around three interconnected pillars: semiconductors, physical AI, and AI data centers. President Lee described them as “the triple axis for a great leap forward,” warning that “the results of the megaprojects will determine Korea’s fate for the next 20 to 30 years,” as reported by Yonhap News Agency.
Semiconductor Cluster
The centerpiece of the plan is an 800 trillion won (€455 billion / $518 billion) investment to build four new memory chip fabrication plants in the southwestern Honam region, with Samsung Electronics and SK hynix each constructing two facilities. Industry Minister Kim Jung-kwan announced the plan during a national investment briefing, stating that “relying on a single production base in the Seoul metropolitan area is no longer sufficient to meet surging semiconductor demand.” The government aims to double memory chip production capacity within five years by accelerating construction schedules by up to 12 years.
According to The Korea Times, Samsung Electronics Executive Chairman Lee Jae-yong confirmed that Gwangju is the leading candidate for Samsung’s next fab, citing advantages in electricity, water supply, workforce availability, and infrastructure incentives.
AI Data Centers
SK Group, GS Group, and Naver will invest an initial 550 trillion won (€312 billion) to build 8.4 gigawatts of AI data center capacity by 2029, expanding to 18.4 GW by 2035 with total investment exceeding 1,000 trillion won. Science Minister Bae Kyung-hoon emphasized the urgency, declaring that “the next three years will be the golden time to become No. 1 in the area of physical AI.” The government plans to designate AI data centers as a national strategic industry and develop a general-purpose foundation model for physical AI within three years.
Physical AI and Robotics
South Korea aims to raise its share of the global humanoid robot market from just 1 percent to 20 percent, targeting a position among the world’s top three AI robot powers by 2030. The government plans to create early domestic demand by procuring humanoid robots for education, defense, and disaster response. Industry Minister Kim warned that China has already begun mass-producing humanoid robots, underscoring the need for South Korea to accelerate commercialization.
Regional Development Strategy
The plan is explicitly designed to promote balanced regional development beyond the Seoul metropolitan area, where most advanced industries are currently concentrated. President Lee emphasized that the Honam region’s “long-term exclusion from development has paradoxically created opportunities” due to abundant water resources and renewable energy. An additional 81 trillion won will be invested in a semiconductor packaging hub in the Chungcheong region, while Daegu and North Gyeongsang will host innovation hubs for semiconductor materials and equipment.
As BBC News reported, Lee stated that the project was 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,” he wrote.
Political Controversy
The opposition People Power Party has criticized the plan, arguing that locating the second semiconductor cluster in Honam — President Lee’s traditional electoral stronghold where 85 percent of voters backed him in the 2025 presidential election — is driven more by regional politics than industrial logic. According to Al Jazeera, they have accused the government of pressuring memory chipmakers to invest in the region to bolster political support rather than allowing companies to choose the most commercially viable locations. President Lee defended the decision in a series of posts on X over the weekend before the announcement.
Challenges and Risks
Analysts have identified significant challenges to executing the ambitious plan. Professor Lee Jong-hwan of Sangmyung University noted that “the region currently has no semiconductor ecosystem at all,” with most skilled workers and suppliers remaining concentrated in the Seoul metropolitan area. Building far from existing industrial basins will require massive new power, water, and transportation infrastructure. The government has pledged to supply 6.3 GW of power and 650,000 tons of water daily to the Honam cluster.
Some investors have also raised concerns about the enormous sums being poured into AI, triggering stock slides in recent days. Apple and Microsoft recently raised device prices due to surging chip costs, highlighting the broader global impact of the semiconductor shortage driven by AI demand.
National Dividend Debate
The announcement comes amid a broader national debate about redistributing the enormous profits generated by the AI and semiconductor boom. Senior Presidential Secretary Kim Yong-beom has proposed a “national dividend,” arguing that South Korea is becoming a “technology monopoly economy” centered on semiconductor profits. Professor Kim Jung-nam of KAIST noted that “the country that meticulously designs how to distribute the wealth generated by AI will be the one that sets global standards for AI.”
Global Context
The plan positions South Korea in a fierce global race for AI and semiconductor dominance. Regional rivals Taiwan, China, and Japan are all investing heavily in chip factories, while US tech giants Google, Amazon, and Meta announced $650 billion in AI infrastructure spending for 2026 alone. SK Hynix’s market valuation topped $1 trillion in May 2026, driven by the AI data center boom.
What’s Next
With construction timelines accelerated by up to 12 years, the coming months will reveal whether South Korea can overcome the workforce, infrastructure, and political challenges to execute its vision. The government’s next steps — including legislation on the proposed national dividend and detailed plans for workforce training and infrastructure development — will be closely watched by global markets and rival economies alike. As President Lee put it, “We must secure the core elements of AI faster than any other country.”