Samsung and SK Hynix plan $590bn chipmaking expansion
Companies to invest alongside South Korean government in factories to meet surging demand for memory chips
Samsung Electronics and SK Hynix, the world’s largest makers of memory chips, and the South Korean government plan to invest $590bn in a vast manufacturing expansion as the AI boom exacerbates chip shortages.
The companies and government will invest a combined Won911tn ($590bn) to build chipmaking facilities in under-developed parts of South Korea as part of President Lee Jae Myung’s plan to promote more balanced regional economic development.
The investment pledges are part of the “Three Mega Projects for the Great Leap Forward” initiative announced on Monday and aimed at developing the country’s capabilities in semiconductors, AI data centres and robotics.
“The AI revolution is reshaping the global economic and industrial landscape,” the government said in a statement. “Our competitors are aggressively building semiconductor fabs to meet rapidly growing demand . . . we must respond swiftly to stay ahead.”
About Won800tn will be spent on building four chipmaking plants in the country’s south-western region, while Won81tn will go towards constructing a chip packaging cluster in its central region.
Over the next 15 years, South Korea plans to invest Won30tn to develop next-generation memory chips, on-device AI chips and semiconductors used in defence.
South Korea’s chipmakers are racing to meet surging demand from the data centres that power chatbots and other AI tools. The world’s five largest AI companies are expected to spend more than $1tn in 2025 and 2026 on data centres.
Their demand has raised memory chip prices for other customers, including consumer electronics makers. Last week, Apple raised MacBook and iPad prices, citing the “unsustainable” cost of memory and storage.
Samsung and SK Hynix now have a combined market capitalisation of roughly $2tn.
Together, the two companies account for nearly 80 per cent of the global market for high-bandwidth memory chips, which enable the rapid movement of the massive volumes of data required for AI applications.