South Korea Unveils $518 Billion AI Chip Investment Plan

Rapid growth in artificial intelligence and semiconductor chips has become a key driver of economic and industrial transformation among global technology powers. Seeking to capitalize on this critical window, South Korea is channeling increased tax revenue into technology infrastructure. Through state-level investment, the government aims to preserve the country’s global leadership in chip manufacturing, high-speed computing infrastructure and cutting-edge AI technology while strengthening its long-term national competitiveness.

President Lee Jae-myung announced at a national fiscal strategy meeting on July 13, 2026, that the government plans to raise its total fiscal 2027 budget above 800 trillion won, equivalent to more than NT$17 trillion, as tax revenue from the AI industry grows. The record budget will prioritize three megaprojects covering semiconductors, AI data centers and physical AI. The government will also establish a future response fund to begin strategic technology investments in 2027.

South Korea has designated semiconductors and artificial intelligence as national strategic industries as it seeks to maintain its lead amid intensifying global chip competition and rising demand for AI computing power. President Lee Jae-myung has instructed the government to remove bottlenecks involving administrative approvals, electricity and water supplies, ensuring that long-term investments by companies including Samsung Electronics and SK Hynix proceed on schedule.

As of July 20, 2026, Lee had ordered officials to accelerate chip and AI projects worth a combined $576 billion, stressing that speed is critical in the industrial race. Samsung Electronics and SK Hynix plan to invest in new chip production hubs and AI data centers, while the government must complete the necessary power, water and transportation infrastructure in parallel.

The expansion of AI data centers is driving demand for HBM, DRAM and advanced packaging, prompting Samsung Group and SK Group to increase production capacity in South Korea. The investments also address US-China technology competition and supply-chain risks across the Taiwan Strait. Citigroup expects the push to generate orders and spur technological upgrades for South Korea’s semiconductor equipment industry.

On June 29, 2026, Samsung and SK unveiled overall investment plans of up to 2,000 trillion won, or about $1.3 trillion, over the next 10 years, including new wafer fabrication and packaging facilities in South Korea. SK hynix separately plans to invest 1,100 trillion won and has brought forward the targeted completion of its fourth fabrication plant in Yongin to 2033.

Generative AI is driving data-center expansion, making high-bandwidth memory, or HBM, a critical GPU component. Young South Korean investors are consequently shifting funds from cryptocurrencies into Samsung Electronics and SK hynix, betting on the companies’ positions in the global memory supply chain. The trend echoes Taiwanese investors’ longstanding enthusiasm for holding TSMC shares.

HBM demand has climbed rapidly in recent months, channeling market funds into Samsung Electronics and SK hynix and driving significant gains in both companies’ shares. The Korea Exchange’s KOSPI also surpassed 6,000 points for the first time, propelled by the AI chip rally and reflecting a clear shift among South Korean retail investors toward the AI hardware supply chain.