*Updated with additional information
SEOUL, June 29 (AJP) -SEOUL, June 29 (AJP) —South Korea envisions transforming itself into a "Chip Republic," committing more than 800 trillion won ($520 billion) to build a second semiconductor belt spanning the country's southwestern region in an unprecedented industrial strategy designed to preserve its leadership in AI-era chips.
The master plan calls for four new wafer fabrication plants in the southwestern Honam region, an advanced semiconductor packaging hub in the central Chungcheong region and a supply-chain manufacturing cluster in the southeastern Yeongnam region, creating a nationwide semiconductor ecosystem beyond the Seoul metropolitan area.
The AI-led industrial strategy rests on what Industry Minister Kim Jung-kwan called the "three S's" — speed, stronghold and spearhead.
The completion of the Yongjin chip cluster project will be fastened by 12 years to 2033, he said.
"We will move faster than our competitors, build an unshakable industrial stronghold and spearhead the next generation of AI technologies," Kim said Monday while unveiling what is expected to become the Lee Jae Myung administration's most ambitious state-backed industrial initiative.
"I will personally oversee and deliver these three mega projects," President Lee Jae Myung said in his opening remarks, flanked by Samsung Electronics Executive Chairman Lee Jae-yong on his right and SK Group Chairman Chey Tae-won on his left.
The three national initiatives comprise semiconductors, Physical AI and AI data centers, placing chips at the center of South Korea's next growth strategy.
Samsung Electronics and SK hynix will each construct two state-of-the-art fabrication plants in Jeolla Province, creating what the government describes as a second national semiconductor cluster to complement the existing "K-Chip Belt" around Gyeonggi Province.
The blueprint reflects the Lee administration's vision of building a fully integrated AI ecosystem stretching from semiconductor fabrication and advanced packaging to hyperscale AI data centers while reducing South Korea's decades-long economic dependence on the Seoul metropolitan area.
Honam, encompassing Gwangju and the North and South Jeolla provinces, has historically received far less high-tech investment than the capital region despite its strong manufacturing base. The government hopes the semiconductor push will transform the region into a new growth engine for the AI economy.
If completed as planned, the project would create a second semiconductor manufacturing corridor alongside the existing cluster surrounding Seoul, where Samsung, SK hynix and hundreds of suppliers currently concentrate their production.
The strategy also reflects an intensifying global race to secure AI infrastructure, as governments increasingly view semiconductors, electricity, water resources and hyperscale computing facilities as strategic national assets rather than ordinary industrial investments.
Unlike previous semiconductor policies focused primarily on manufacturing capacity, the new blueprint seeks to integrate the entire AI value chain — from chip production and advanced packaging to data centers and power infrastructure — into a single national industrial strategy.
Samsung Executive Chairman Lee Jae-yong outlined a nationwide investment map extending well beyond semiconductors, saying Gwangju had emerged as the leading candidate for Samsung's next fabrication complex.
"Among several candidates, Gwangju offers the greatest potential through secure electricity and water supplies, a skilled workforce and strong government support," Lee said.
He noted that Samsung's investment timetable has accelerated significantly following the expansion of its Giheung, Hwaseong, Pyeongtaek and Yongin semiconductor campuses, making preparations for a new production base necessary sooner than expected.
Lee said Samsung will concentrate investment in high-bandwidth memory (HBM) manufacturing around Cheonan and Onyang in the Chungcheong region, where advanced packaging capabilities are already being built.
"HBM, which powers AI training and inference, requires cutting-edge chip stacking technology and manufacturing processes equivalent to a front-end fabrication plant," he said.
Beyond semiconductors, Samsung plans to concentrate humanoid robots and Physical AI investments in Gumi, North Gyeongsang Province, supported by AI data centers serving the group's own operations.
Samsung SDI will continue expanding next-generation all-solid-state battery and battery energy storage system production in Ulsan, while Samsung Heavy Industries will increase investment in next-generation shipbuilding in Geoje. Samsung Electro-Mechanics will expand production of advanced package substrates in Busan, and Samsung Biologics will continue to concentrate its biotechnology investments in Songdo, west of Seoul.
Chey Tae-won, chairman of SK Group, unveiled an even larger investment blueprint, saying SK would commit about 1,100 trillion won to AI infrastructure and semiconductors through 2035, including 400 trillion won to build a new semiconductor cluster in the country's southwest.
"The question is not why Korea should pursue AI, but what we want AI to accomplish," Chey said. "Korea should become a country that produces and exports intelligence."
He proposed building multiple AI data centers totaling five gigawatts in the first phase before expanding to 10 gigawatts, describing them as "AI factories" that would manufacture intelligence rather than conventional industrial goods.
Chey also confirmed that SK hynix will accelerate construction of its Yongin semiconductor cluster by 12 years, bringing completion forward to 2033, while investing 400 trillion won in the southwestern region to establish a second semiconductor manufacturing base.
"Even after these investments, demand will continue to outstrip supply," he said, predicting persistent shortages of AI memory chips as computing demand accelerates worldwide.
Science and ICT Minister Bae Kyung-hoon said the government aims to facilitate more than 1,000 trillion won of cumulative investment in AI data centers by 2035, describing computing infrastructure as the next strategic battleground alongside semiconductors.
President Lee closed the event by elevating the country's two business leaders to an unusual status rarely bestowed by a South Korean president.
"This is a truly moving moment. Today marks the beginning of a new chapter in Korea's history," Lee said.
Calling Lee Jae-yong and Chey "national heroes," he praised them for choosing to expand investment at home rather than overseas despite fierce global competition to attract semiconductor projects.
"You have shown that companies can pursue profits while also serving the nation," Lee said.
Lee then bowed separately to each chairman before taking both men's hands in a rare public display of appreciation toward corporate leaders, pledging to establish a dedicated office under the presidential secretariat to oversee what he described as Korea's three defining projects — semiconductors, Physical AI and AI data centers.
Investors were equally pleased. The KOSPI that sank to as low as 8,127.99 finished Monday slightly positive at 8,425.72 while the KOSDAQ soared more than 8 percent.
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