Building a New Semiconductor and AI Data Center — Korean Government to Invest Trillions of Won

On the 29th, South Korean President Lee Jae-myung presided over a meeting at the presidential Blue House, announcing government and private investment plans and support measures totaling over 1,000 trillion won in the fields of semiconductors, physical artificial intelligence (AI), and AI data centers.

Lee Jae-myung stated, “Speed is the only way to survive. We must secure AI core elements faster than any other country.”

He emphasized that, in the AI era, major countries like the United States and China are fiercely competing for industrial dominance, and South Korea must accelerate the construction of a Korea-style AI ecosystem through cooperation between government and enterprises.

According to the plan, total investment by the Korean government in advanced technologies such as AI and semiconductors will reach 1,461 trillion won (about MYR 3.85 trillion), of which 800 trillion won will go toward investment into a semiconductor production base in Korea’s southwest, 81 trillion won into a high-bandwidth memory chip (HBM) packaging base in the Chungcheong region, 550 trillion won into AI data centers, and 30 trillion won into next-generation semiconductor R&D.

South Korean Minister of Science and ICT Bae Kyung-hoon pointed out that by 2029, Korea will invest 550 trillion won in AI data centers. By 2035, a new 10 GW AI data center will be added, which will bring the total power capacity of AI data centers to over 18.4 GW, with cumulative investment exceeding 1,000 trillion won.

These investment plans are in line with Lee Jae-myung's policy approach of expanding industrial development beyond the capital region.

In addition, at the meeting, Samsung Electronics and SK Group also announced mid- to long-term domestic investment plans totaling about 475.5 trillion won. Among these, Samsung Electronics' 265.5 trillion won investment plan focuses on a semiconductor industry cluster, while SK Group’s 210 trillion won investment covers SK Telecom’s approximately 100 trillion won AI data center investment and SK hynix’s approximately 110 trillion won AI memory production complex.

The government’s announced investment plan is a core part of one of the nation's “three super projects.” The plan aims to prioritize semiconductor and AI industry investments outside the capital region to drive the development of Korea’s cutting-edge industries and enhance national core technology competitiveness.

The southwest regions including Gwangju and Jeollado are South Korea’s traditional liberal strongholds and have long lagged in development compared to the more industrialized southeast. The gap between the two regions dates back to the rapid economic development period during the 1960s and 1970s under former President Park Chung-hee.

However, Kim Dae-jung, a professor of business administration at Sejong University, warned that if there are no incentives provided for companies to voluntarily relocate, these massive investments may backfire, potentially damaging South Korea’s semiconductor competitiveness.