Samsung, SK pledge 896 trillion won to back Lee's southwest chips megaproject

Samsung, SK and Amkor pledged a combined investment of 896 trillion won ($578 billion) to establish a chips hub in Korea’s southwest, as the government on Tuesday promised deregulation and other measures to support the push for regional growth.  

President Lee Jae Myung held a public briefing in Gwangju to outline his vision for high-tech industrial development in the southwest region after the government announced three mega projects aimed at attracting massive investment in semiconductors, physical AI and AI data centers the previous day.

"I will personally oversee the project and take full responsibility for both its planning and execution,” Lee said during the briefing announcing the government’s strategy for growing advanced industries. "I will prove that this is the real deal, rather than just a policy show, or a mere publicity stunt."

On Monday, President Lee unveiled large-scale investment projects, joined by SK Group Chairman Chey Tae-won and Samsung Electronics Executive Chairman Lee Jae-yong. Samsung Electronics and SK hynix announced plans to invest some 800 trillion won to build four new chip facilities in the country's southwest region, without providing specifics.

During Tuesday’s briefing, executives of Samsung Electronics and SK hynix further elaborated on their investment plans for the region, but also stopped short of detailing specific locations or a detailed timeline.  

SK announced an investment of 470 trillion won in the region to build two semiconductor fabs and a 1-gigawatt AI data center.

Samsung said it will invest 425 trillion won to build two memory fabs and a national AI computing center in the Honam region, which covers the Gwangju and Jeolla province.

Amkor Technology, a U.S.-headquartered multinational chip packaging company, also pledged to invest 1 trillion won to expand its packaging facility in Gwangju.

During the event, President Lee mentioned Samsung Electronics’ Lee and SK Group’s Chey, noting, “It seems they had originally intended to invest here after completing the Yongin cluster currently under construction," but added he had “urged them to proceed with both projects simultaneously, given the explosive surge in chip demand."

"We will proceed with investments in the Honam region, and the government will do its utmost to provide support — whether through financial aid, infrastructure development, or improvements to living conditions such as education,” Lee added.

The government envisions developing the southwestern region into a second semiconductor production hub, following the Seoul metropolitan area, by encouraging innovation through regulatory reform, expanding the power grid and cultivating talented personnel.

"In the AI era, memory has evolved beyond a mere component to become a core infrastructure that determines AI performance itself," SK hynix CEO Kwak Noh-jung said during the briefing. "Given the projected explosive growth demand, the Yongin semiconductor cluster alone would be insufficient to meet requirements, necessitating a new chips cluster."

He noted that the southwestern region is a location expected to meet the necessary conditions for a semiconductor cluster," and said SK plans to “establish a production base there to address global demand for memory."

"We anticipate enormous demand for semiconductors in the future," Jun Young-hyun, head of Samsung Electronics Device Solutions Division and Memory business, said. “As the investment schedule for the Yongin industrial complex has been accelerated, the timing to prepare a new hub is also being raised."

Jun also stressed the importance of a stable power supply for the Honam region’s semiconductor cluster and urged the government to actively pursue the expansion of nuclear power.

Regarding investment timeline, both SK and Samsung have held a cautious stance is that it remains subject to change based on future market conditions and shifts in the business environment.

The government plans to develop infrastructure tailored to the southwestern region to support the construction of semiconductor fabs by companies, including water and power supplies. The ministry revealed its S-WEST vision, where the government plans to provide support in securing sites, water and electricity supplies and talent.

The ministry said the fabs alone would require 6.3 gigawatts of electricity, equivalent to the output of a 4.5- gigawatt nuclear power plant, and consume 650,000 tons of water daily.

Minister of Trade, Industry and Resources Kim Jung-kwan said that his ministry will push for the enactment of a “mega special zone act” to create a more attractive investment environment.

Kim noted that the chips investments in the southwestern region will amount to the combined economic output of the South Jeolla and Gwangju areas over five years.

A model for private-led high-tech cities, linked to corporate investment plans, will also be established, the Industry Ministry said, building cities that integrate industry, housing, transportation and education to ensure stable corporate investment and encourage workers to settle in the area.

The government and participating companies also signed a memorandum of understanding to foster high-tech industries in the southwest region. The MOU outlines strengthened public-private cooperation to develop the region into a growth hub for Korea's advanced industries.

Ahead of the briefing, President Lee toured the SK Group exhibition at Gwangju's Kimdaejung Convention Center alongside SK hynix CEO Kwak, the Blue House said. The exhibition booth showcased AI semiconductor technologies, including server dynamic random-access memory, high bandwidth memory and storage solutions for AI data centers.

BY SARAH KIM [[email protected]]