PHOTO: REUTERS

AFP, Seoul

South Korea will invest nearly $1.2 trillion -- equivalent to more than two-thirds of its GDP -- in a new chip-building hub and AI data centres over several years, as it seeks to profit from soaring demand while developing previously neglected regions.

The enormous cash injection comes as Asia’s fourth-largest economy rides high on a global AI boom -- with South Korean memory chipmakers emerging as a crucial cog in the fast-moving industry.

“Speed is the only path to survival. We must secure the core elements of artificial intelligence faster than any other nation,” President Lee Jae Myung said in Seoul at an event to unveil the public-private collaboration.

Samsung Electronics and SK Hynix will make a record investment of 800 trillion won (around $520 billion) in a new semiconductor fabrication hub in the country’s southwest, the government said.

Both companies have seen profits and share prices skyrocket in recent months, as frenzied demand for AI infrastructure squeezes the global supply of memory chips.

The government also announced a separate investment of a quadrillion won (around $650 billion) in AI data centres over the next 10 years.

The plans are in line with Lee’s agenda for industrial development in regions outside the capital, and Industry Minister Kim Jung-kwan said the Samsung-SK Hynix project will comprise four fabrication plants.

“We will develop the southwestern region into a second semiconductor production hub,” he said. Samsung Electronics and SK Hynix will each build two plants under the 800 trillion won project, according to Kim’s presentation slide.

“Permit approvals and construction timelines will be dramatically shortened to rapidly expand production capacity,” Kim said.

“Through this, we will maintain an overwhelming market leadership and a decisive technological gap in the memory semiconductor sector.”