Summary of Key Points
The South Korean government, in collaboration with the two major semiconductor giants Samsung and SK, has invested a staggering 4755 trillion won (approximately 20.92 trillion yuan) in three major projects: semiconductor capacity expansion, physical AI (including humanoid robots), and AI data centers. This represents the largest industrial investment in South Korean history, essentially betting the country's future prosperity on AI over the next two to three decades. The move is not only aimed at addressing domestic economic growth challenges and global competition but also intensifies the global race for AI infrastructure.
What Exactly Has Been Invested in This “National Gamble”?
The funds from the two giants have been allocated towards three main areas:
1. Semiconductor Capacity Expansion: Samsung has invested 2655 trillion won to build AI semiconductor and robotics bases in the capital region and a new wafer factory in Gwangju to meet the growing demand for chips in the AI sector. SK Hynix has invested 1100 trillion won to expand its production of DRAM (memory) and NAND (flash memory), advancing the completion of its Longin semiconductor cluster by 12 years (originally planned for 2045, now scheduled for 2033).
2. Physical AI: The government is supporting domestic humanoid robot manufacturers (used in education and defense applications) to boost the market share from 1% to 20%, currently held by China (86%).
3. AI Data Centers: SK plans to invest 1000 trillion won in data center construction, with the goal of having a total power capacity of 18.4 GW dedicated to AI by 2035—this is equivalent to 0.18 times South Korea’s entire national electricity grid capacity (which peaked at around 100 GW in 2024).
Why Does South Korea Dare to Invest So Much?
Their confidence stems from three key factors:
- Surging AI Demand and Profits in Storage Chips: AI models require large amounts of high-end storage chips, such as HBM. This year, there has been a wave of price increases for storage chips, with some models doubling in price. Samsung and SK Hynix reported record profits in the first quarter; SK Hynix holds over 55% of the global HBM market share, while Samsung leads globally in both DRAM and NAND production, providing them with substantial financial resources.
- Continuing Demand Growth and Limited Supply: According to TrendForce, global demand for DRAM is expected to increase by 20% in 2026, but supply growth is lagging behind. As the largest supplier of storage chips, South Korea can gain a competitive advantage by expanding its production capacity.
- The Urgency of the Global AI Race: The United States has invested $500 billion in AI infrastructure, and China holds an 86% share in the humanoid robot market. If South Korea fails to keep up, it may fall behind.
Where Does South Korea’s “Anxiety” Come From?
This bold investment reflects the country’s sense of urgency:
- Economic Growth Slows: South Korea’s potential GDP growth rate has declined from 2.4% in 2022 to 1.9% in 2025, due to factors such as an aging population, declining labor forces, and increasing welfare expenditures. Traditional industries (automotive, shipbuilding) are struggling, necessitating the discovery of new growth drivers.
- Fierce Global Competition: AI represents the “fourth industrial revolution,” and major countries are vying for dominance. The United States has initiatives like the “Interstellar Gate” program, while China is making rapid progress in storage and robotics. If South Korea does not invest in AI, it may lose its influence in the global industry landscape.
- Capacity Bottlenecks: Existing semiconductor factories in the capital region are at full capacity, leading to shortages of power and water. Expanding production in the southwestern region (e.g., Gwangju) is necessary to address these issues and promote balanced regional development.
What Are the Potential Outcomes of This Investment?
The impact will be felt both in South Korea and globally:
- For South Korea: It aims to consolidate its dominance in storage chips, transforming from a consumer of AI technology to an exporter of chips, robots, and data center services. This investment will also drive industrial upgrading, such as integrating robotics with automotive and shipbuilding technologies, potentially making South Korea a “robotics powerhouse.”
- For the Global Market: The competition for AI infrastructure will intensify, with other countries (e.g., the United States, China, Europe) likely increasing their investments. While supply of storage chips may increase, price trends are expected to remain high due to rapid demand growth.
Key Goals Related to Physical AI and Data Centers:
- Humanoid Robots: South Korea currently ranks third in the world in robot usage per 10,000 workers (470 robots). By leveraging its strengths in automotive and semiconductor technologies, it aims to boost its global share of humanoid robots from 1% to 20%.
- AI Data Centers: With a total capacity of 18.4 GW by 2035, South Korea will have a dedicated infrastructure for AI, supporting the training of large models and various AI applications.
In summary, South Korea’s bold investment is a last-ditch effort to secure a place in the AI era through national support and corporate capital. Whether it will be successful depends on future implementation and global market developments. For now, however, it has certainly intensified the global competition for AI infrastructure.