Samsung Electronics and SK Hynix, South Korea’s two chipmaking giants, tumbled on Monday even as the government prepared to unveil a landmark $576 billion+ investment plan for semiconductors and artificial intelligence. The irony wasn’t lost on traders: a spending package that could top 2,000 trillion won (about $1.3 trillion) would normally be a bullish signal, yet both stocks skidded hard. Samsung dropped more than 4%, while SK Hynix shed over 3%, as investors weighed the enormous capital needed to stay competitive in the AI race.
President Lee Jae-myung was set to announce his “Three Mega Projects for the Great Leap Forward” initiative on Monday, focusing on semiconductors, AI data centres, and robotics. The core of the plan sees Samsung and SK Hynix investing around 518 billion dollars to build two new chip fabrication sites each in the southwestern region, supplemented by a 81 trillion won chip packaging cluster near Seoul. Samsung’s chairman confirmed Gwangju as the site for its new chip cluster; SK Hynix indicated it needed more time to finalise its location.
The government aims to double DRAM output within five years by accelerating fab construction, betting that South Korea can hold onto its dominant position in global memory markets. Yet the sheer scale of the plan raised concerns about supply gluts, ballooning capex, and the risk that both companies end up spending aggressively at the same time—classic pitfalls of the memory chip cycle.
For Samsung, the spending is partly a catch-up move. SK Hynix recently overtook it to become South Korea’s most valuable listed company on the back of high-bandwidth memory (HBM) leadership, the specialised chips used in Nvidia’s AI systems. Analyst Kim Sunwoo noted that customised AI memory has “fundamentally changed the industry’s economics”. Samsung’s investments aim to close that gap with new fabs, data centres in Asan, and advanced packaging. SK Hynix, while the current HBM king, must now defend its lead without overspending—already raising capital via a planned US listing and committing heavily to EUV equipment.
The plan has also drawn political fire. Opposition figures claim the southwest location was chosen because around 85% of voters there backed President Lee in the last election. Lee’s approval rating has slipped for six weeks, hitting 46.5% in polls. Experts warn that building advanced fabs requires enormous amounts of power, water, and skilled labour—resources that may not be available quickly in a new region. SK Hynix’s chairman pointed out it took nine years to develop its Yongin cluster, underscoring the execution risk. Still, with global AI demand surging and SK Hynix’s market value crossing $1 trillion in May, the government sees the plan as a matter of national survival.
