Stock Markets June 28, 2026 09:12 PM

South Korea to Announce Ambitious AI and Chip Investment Initiative Centered on New Southwest Cluster

President Lee to unveil three 'mega-projects' aimed at spurring semiconductor, AI and robotics investment outside Seoul with broad government support

By Maya Rios
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South Korea will present three large-scale projects intended to accelerate the country’s AI and semiconductor ambitions, including a proposed new chip cluster in the southwest that local media say could draw investments from Samsung and SK totalling hundreds of billions of dollars over several years. The package, announced by the president’s office and to be unveiled with policy measures from multiple ministries, includes semiconductors, AI data centres and physical AI such as robotics, alongside extensive infrastructure and social support for the chosen region.

South Korea to Announce Ambitious AI and Chip Investment Initiative Centered on New Southwest Cluster
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Key Points

  • President Lee will preside over the unveiling of three large-scale projects focused on semiconductors, AI data centres and robotics, scheduled for about 0500 GMT, with industry and government ministries presenting policy measures.
  • A proposed new semiconductor cluster in the southwest, including Gwangju and South Jeolla province, is central to the package; local media report potential investment flows could exceed 1,000 trillion won ($651.41 billion) over coming years, with Samsung and SK expected to present plans.
  • Government support measures will cover power, water, land, infrastructure, workforce training and housing - sectors that will be critical to enabling large-scale semiconductor and AI facility construction and operation.

Summary

South Korea is preparing to roll out three major projects designed to drive the next phase of national growth, anchored by a proposed semiconductor hub in the country’s southwest. The plan, which the presidential office has characterised as a national "great leap," will be unveiled around 0500 GMT and includes policy commitments from ministries covering industry, science, climate and transport.


Event and participants

The announcement will be presided over by President Lee Jae Myung and is expected to feature investment proposals from major private-sector firms. Samsung Electronics and SK are reported by local media to be planning investment pledges, and the chairmen Jay Y. Lee and Chey Tae-won are among business leaders tipped to attend. The presidential office confirmed attendance by representatives of other companies including LG Electronics, HD Hyundai Robotics, Korea Electric Power Corp and Korea Water Resources Corp.


Scope of the package

Officials said the initiative will span three areas: semiconductors, AI data centres and physical AI such as robotics. The president’s social media posts indicated the establishment of a new chip cluster in the underdeveloped southwest, specifically naming Gwangju and South Jeolla province as focal areas. Local media reports have suggested the aggregated investments linked to the plans could exceed 1,000 trillion won ($651.41 billion) over coming years.


Policy and infrastructure support

The government will detail a broad set of support measures as part of the package. Those measures are expected to address electricity and water provision, land allocation, transportation and logistics infrastructure, workforce training and housing. Lee’s office said ministries responsible for industry, science, climate and transport will set out these policy supports at the unveiling.


President’s defence of the plan

President Lee has defended the proposed southwest chip hub in a series of posts on X, rejecting criticism that the initiative amounts to favouring a political stronghold. He framed the measure as a national strategy to correct regional imbalances and to expand semiconductor capacity for the AI era. In one post he wrote: "The creation of a semiconductor industrial ecosystem in (the southwest) is not a special favour for a particular region," and added, "It is the additional creation of the most rational semiconductor industrial centre through the decisions of relevant companies under full government support."


Industry considerations and constraints

Industry experts noted that diversifying chip investment beyond the Seoul metropolitan area could relieve existing infrastructure bottlenecks. At the same time, they cautioned that constructing advanced semiconductor fabrication plants requires vast quantities of electricity and water, sophisticated logistics, well-developed supplier networks and highly skilled labour - components that may not scale quickly enough in a newly developed region to meet rapidly rising AI-related demand.


Context and political response

Opposition politicians have sharply criticised the proposal, questioning whether the initiative is politically motivated given that 85% of voters in the southwest region backed Lee in last year’s presidential election. The unveiling arrives as Lee’s approval rating has declined for six straight weeks to 46.5%, according to pollster Realmeter.


Additional industry notes

South Korea is also home to SK Hynix, and the country hosts the world’s two largest memory chipmakers, whose high-bandwidth memory (HBM) chips are pivotal in the global race to build advanced AI systems. Both Samsung Electronics and SK Hynix already operate major semiconductor facilities in and around the Seoul metropolitan area.


Exchange rate note

At the time of reporting, $1 = 1,535.1300 won.

Risks

  • Building cutting-edge semiconductor fabs requires vast electricity and water supplies, advanced logistics, deep supplier networks and highly skilled labour - constraints that could limit how quickly new capacity can be developed in the southwest, affecting the power, utilities and logistics sectors.
  • Political criticism and questions over regional favouritism may complicate implementation and public support for the plan, introducing uncertainty for contractors, investors and local governments involved in infrastructure and development projects.
  • The scale and timing of private investment commitments remain uncertain despite local media estimates; delay or reduction in planned investments would affect expected economic benefits for the semiconductor, AI and construction sectors.

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