The explosive demand for artificial intelligence (AI) computing power and high-bandwidth memory (HBM) is driving an unprecedented acceleration of national strategy in South Korea.
According to a senior official from the presidential office, the government is currently engaged in intensive, closed-door discussions with Samsung Electronics Co., Ltd. and SK Hynix.
The plan involves an investment exceeding 300 trillion won (approximately $230 billion) to establish a "second semiconductor industrial cluster" in the Gwangju-Jeonnam region, located outside the greater Seoul metropolitan area.
An official announcement of this decision is expected in the near future.
To address the imminent AI supply bottleneck, the two chip giants have completely overhauled their existing blueprints, compressing facility construction timelines originally stretching to mid-century by more than a decade, with a new target for full completion between 2034 and 2035.
Policy Direction and Clarification
On June 24, Kim Yong-pan, the presidential policy chief, stated that plans for Samsung Electronics Co., Ltd. and SK Hynix to build a new semiconductor cluster are in the final stages of discussion and will be publicly announced once finalized.
Kim noted that due to the explosive growth in chip demand from the AI industry, the construction progress of the companies' existing Yongin semiconductor cluster will be significantly accelerated.
He highlighted the challenge of finding a large-scale new site for a second cluster to support the next phase of the AI revolution in seven to eight years, as the Seoul metropolitan area likely lacks sufficient land, power, and water resources for further expansion.
Kim clarified that the new direction is consistent with the administration's thinking and represents a broader rethinking of regional development in the AI era, aiming to decentralize growth from the Seoul area.
He explicitly stated that the Yongin project will not be abandoned or relocated, emphasizing it remains a core project for Korea's chip manufacturing expansion, with the second cluster being an additional initiative.
Location Selection and Considerations
The focus for the second cluster's location is on the Honam region in southwestern Korea.
Reports indicate Samsung Electronics Co., Ltd. and SK Hynix have completed assessments of five candidate sites in the area, evaluating water, electricity, transportation, and supporting infrastructure.
Compared to the Gyeonggi Province region, the Honam area offers advantages in available land, water resources, and power infrastructure, with Gwangju already hosting a mature semiconductor back-end industry ecosystem.
Kim emphasized that establishing the second cluster is a defensive and offensive dual strategy to reshape the national industrial map for the AI era, not a reduction of committed investment in Yongin.
High-level discussions are ongoing, with SK Group Chairman Chey Tae-won having visited the presidential office on June 19 and Samsung Electronics Co., Ltd. Chairman Lee Jae-yong scheduled to meet President Lee on June 25.
Executives from both companies plan to further detail the plan with the President on June 29, with an investment agreement potentially signed during a regional development forum in Gwangju on June 30.
However, the location faces significant debate, with analysts pointing to potential bottlenecks in high-end talent and industrial ecosystem in the Honam region for front-end wafer fabrication, despite its infrastructure advantages.
Investment Scale and Timelines
The scale of the investment plan is staggering, starting at 300 trillion won and potentially reaching several quadrillion won.
Reports suggest the investment plan for the next phase, including details, may be announced by the end of the month, with the two companies' combined investment potentially reaching 300 to 400 trillion won (over $200 billion).
Industry sources indicate they are actively evaluating building a super semiconductor cluster in the Honam region, with a potential investment plan reaching several quadrillion won.
The existing Yongin cluster already has a massive investment base, with Samsung Electronics Co., Ltd. having announced a 360 trillion won plan for the site and the long-term total investment for the entire cluster projected at 960 trillion won.
The explosive growth in AI demand is forcing a dramatic compression of construction timelines.
SK Hynix is discussing advancing the completion of its fourth planned fab in Yongin from 2044 to 2034—a full decade earlier.
Samsung Electronics Co., Ltd. is also being required to advance its project completion from 2048 to around 2034 or 2035.
Beyond Yongin, Samsung Electronics Co., Ltd. is reportedly preparing to start construction on its final Pyeongtaek fab, P5 Fab 2, about six months ahead of schedule, targeting production in 2029.
Kim pointed to the urgency behind the acceleration, stating that explosive AI chip demand requires advancing the entire Yongin cluster schedule and warning that power demand could become a constraining factor.
AI Boom Driving Trillion-Won Investments
This multi-quadrillion won investment race reflects profound changes in the global semiconductor industry.
On the demand side, the expansion of AI from training to inference is driving sustained strong demand for HBM and DRAM.
Bank of America has significantly raised its total addressable market forecast for the semiconductor market from $2.3 trillion to $2.7 trillion, noting visibility for AI-related spending clearly extends to 2028.
On the supply side, forecasts for global wafer fab equipment spending have also been raised substantially.
Analysts note that while the chip industry took about 50 years to reach its first trillion dollars in sales, AI is expected to help add another trillion in sales within just the next five years.
In terms of competition, the strategic divergence between Samsung Electronics Co., Ltd. and SK Hynix in the HBM4 arena is noteworthy, with Samsung showing technological advantages while SK Hynix focuses on profitability management.
The Korean government expects over 25 trillion won in excess tax revenue this year, with the semiconductor supercycle bringing significant economic multiplier effects.
Kim stated that the explosive growth in semiconductor demand requires advancing projects at an unprecedented speed, framing it not just as corporate expansion but as a reshaping of national competitiveness.
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