South Korea has unveiled plans for at least $880bn (£666bn) of investments to build out the country's chip manufacturing and artificial intelligence capabilities in the coming years, as it seeks to keep pace with regional rivals in the global AI arms race.
President Lee Jae Myung announced the so-called Three Mega Projects on Monday, which aim to develop new chip production hubs, data centres and robotics technology. The plan is designed to rejuvenate economies outside the capital Seoul, where most of the country's advanced factories are currently concentrated.
“South Korea commits $880bn to chip and AI to counter regional rivals like Taiwan and China.”
"We must secure the core elements of AI faster than any other country," Lee said in a televised event alongside the leaders of Samsung and SK Hynix, the country's two largest chipmakers. "Semiconductors, physical AI, and AI data centres are the triple axis for a great leap forward."
Lee has previously described the project as a matter of "survival" for the country, to address the decline of rural areas due to the concentration of industries in Seoul. "Now, we must break this long-standing cycle of discrimination and marginalisation - not only for the sake of justice and equity, but also to ensure sustainable and inclusive growth," he wrote.
The investment comes as regional rivals like Taiwan, China and Japan are pouring money into chip factories and other technologies, driven by the AI boom that has pushed up demand for semiconductors. Samsung and SK Group, which count Nvidia among their customers, have been among the biggest beneficiaries of the surge in spending on AI infrastructure. SK Hynix's stock market valuation topped $1tn in May, fuelled by the boom in AI data centres.
The surge in demand has led to a global shortage of semiconductors, sending prices higher. Last week, Apple and Microsoft raised prices on some of their devices due to higher component costs. Meanwhile, US tech giants including Google, Amazon and Meta have said they will spend a combined $650bn on the technology this year.
But some investors have raised concerns about the huge amounts of money being poured into AI, which has triggered shares to slide in recent days. The long-term returns on such vast expenditure remain uncertain, even as South Korea bets big on becoming a powerhouse in the next wave of technological innovation.