South Korean tech giants to build a $518 billion chipmaking hub to serve
soaring AI demand
[June 29, 2026] By
KIM TONG-HYUNG
SEOUL, South Korea (AP) — South Korean tech giants Samsung Electronics
and SK Hynix said Monday they will invest a combined 800 trillion won
($518 billion) in building a new computer chipmaking hub in the
country’s southwest region, capitalizing on surging artificial
intelligence -driven demand.
President Lee Jae Myung joined the companies’ chairs Monday in
announcing the plan, which dovetails with the government’s efforts to
expand investment beyond the greater Seoul metropolitan area, the
country’s economic center and heart of its semiconductor sector.
The southwest has been a particular focus, as it lacks major industrial
hubs and has historically trailed in economic development. The region
has long been a political base for Lee’s liberal Democratic Party.
Samsung and SK Hynix, which together produce about two-thirds of the
world’s memory chips, said they will each build two fabrication plants
in the southwest, expanding beyond their existing manufacturing
complexes in Gyeonggi Province, south of Seoul.
Samsung Chairman Lee Jae-yong said the company’s new fabs will be built
in the southwestern city of Gwangju, where experts have proposed several
potential sites, including the grounds of a military air base slated for
relocation.
The companies didn’t specify when the fabs in the southwest regions
would be completed. SK Hynix's Chairman Chey Tae-won said the project
would be a complex, large-scale effort requiring “vast sites, along with
sufficient power, water and skilled workers." He said it took nine years
for SK Hynix to establish its major manufacturing cluster in Gyeonggi
Province. Still, a significant expansion of manufacturing facilities is
needed for the company to keep up with global demand, Chey said.
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South Korean President Lee Jae Myung attends an announcement with
Samsung Electronics Chairman Lee Jae-yong and SK Group Chairman Chey
Tae-won at the Blue House presidential office in Seoul, South Korea,
Monday, June 29, 2026. (Kim Min-Hee/Pool Photo via AP)
 Government officials dismissed
questions about whether the southwest has enough power and water to
support major semiconductor fabs. They said the region’s strength in
renewable energy would give the chipmakers an edge as they face
growing global pressure to use cleaner sources of electricity.
Samsung and SK Hynix have reported record profits in recent months
as soaring global investment in data centers and other AI
infrastructure has fueled demand for memory chips. Government
officials and business experts expect AI-driven demand to continue
increasing as the technology spreads to AI-powered industrial robots
and autonomous vehicles. The chipmakers' existing semiconductor
complexes in Gyeonggi Province may reach capacity sooner than
expected, they say.
During Monday’s event, government officials outlined plans to build
what they called a nationwide semiconductor ecosystem, with existing
manufacturing hubs in the southeast expanding production of chip
components and materials, the central Chungcheong region
specializing in chip packaging, while data centers are built across
the country.
“We must establish the core building blocks of artificial
intelligence faster than any other country. Semiconductors, physical
AI and AI data centers are the three pillars of our next great leap
forward,” the president said.
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