South Korea’s semiconductor industry is experiencing a significant investment surge, driven by the explosive demand for artificial intelligence (AI) chips and bolstered by strong government support. Chipmaking giants Samsung Electronics and SK hynix are at the forefront of this expansion, with large-scale construction projects and technology upgrades aimed at securing their positions in the rapidly growing global AI chip market.

Government steps up with billions in support

The Korean government in April announced a major boost to its semiconductor strategy, increasing planned investment from KRW26 trillion to KRW33 trillion (approximately $23.2bn), Korea Times reports. The initiative aims to build a private-sector-led innovation ecosystem and strengthen national competitiveness amid ongoing geopolitical and economic uncertainty.

Initial funding will support infrastructure development for chipmaking hubs in Yongin and Pyeongtaek, both located south of Seoul. These sites are already central to current and future facilities by Samsung and SK hynix.

In addition, low-interest loans for the industry will be increased by KRW3 trillion between 2025 and 2027, bringing the total to KRW20 trillion. The government will also invest in large-scale R&D projects, advanced fabrication plants, and talent development programmes, including initiatives to train local specialists and attract top-tier global experts.

Samsung reignites construction of mega fab

Samsung Electronics is reportedly resuming construction at its Pyeongtaek Campus Line 4 (P4), according to The Korea Herald. The site had previously paused some phases, but activity on phases two and four is now restarting. These new lines will focus on sixth-generation 1c DRAM chips using a 10-nanometre process, essential for next-gen HBM4 chips.

Samsung Vice Chair Jun Young-hyun recently travelled to the US for talks with Nvidia, a move widely seen as an effort to secure future HBM orders and reassert Samsung’s competitiveness in the high-bandwidth memory market.

Once operational, Phase 4 of the P4 facility is expected to contribute 80,000 wafers per month, accounting for 40% of the site's planned 200,000-wafer monthly capacity. Reports also suggest Samsung may revisit its halted P5 project, which would require an investment of over KRW30 trillion ($22bn) to produce DRAM, NAND flash, and foundry chips.

SK hynix doubles down on DRAM and packaging

The Korea Herald also reports that SK hynix is also intensifying its manufacturing push. Its M15X plant in Cheongju is set to open later this year, focusing on fifth-generation 10nm-class DRAM chips for HBM4 products. The facility will have a monthly capacity of around 90,000 wafers.

In parallel, SK hynix is developing a new back-end packaging plant, named “P&T 7,” also in Cheongju. This facility will enhance packaging capabilities and improve energy efficiency for high-performance AI semiconductors.

A market on the rise

The global AI semiconductor market is expected to grow rapidly, with the Export-Import Bank of Korea projecting an increase from $41.1bn in 2022 to $133bn by 2028. This sharp upward trajectory is spurring urgent investment from both government and industry players.

South Korea’s strategy goes beyond building more fabs. It is a calculated push to stay competitive in the global AI chip race. The government is backing the sector with serious funding while letting private players lead innovation, which is a practical and forward-looking approach.

Samsung is clearly shifting focus toward high-performance memory with its DRAM and HBM investments, while SK hynix is strengthening its packaging capabilities to meet AI processing needs. Both are positioning themselves for long-term dominance in a market that is evolving fast. The key question is whether Korea can scale its foundry capacity quickly enough to challenge the current leaders. If it succeeds, the global chip map could look very different within the decade.