Samsung Electronics and SK Hynix are preparing a major expansion of South Korea’s semiconductor manufacturing capacity as demand for AI memory continues to grow. The wider national initiative involves hundreds of billions of dollars in public and private investment, with the two memory companies expected to build four new large scale chip factories in the country’s southwest.
The central manufacturing plan is valued at about 800 trillion Korean won, or roughly $518 billion. It forms part of a broader South Korean AI infrastructure strategy that could reach around 1,350 trillion won when data centers, power projects, and other related investments are included.
The goal is ambitious. South Korea wants to significantly increase DRAM output within the next five years while strengthening its position in high bandwidth memory, a type of advanced memory used in AI accelerators and data center hardware.
Samsung and SK Hynix will not be jointly designing chips or sharing production facilities. Instead, both companies are expected to build and operate their own fabs within the same government supported regional cluster. The approach allows them to benefit from shared infrastructure, faster approvals, subsidies, and improved access to power and water.
Four new fabs are planned for South Korea’s southwest
The proposed factories are expected to be built in the Honam region near Gwangju. The location is important because advanced chip plants require enormous amounts of electricity and water, especially when producing high bandwidth memory for AI processors.
South Korea’s existing semiconductor hubs are heavily concentrated closer to Seoul, where available utility capacity has become more limited. Moving new factories to the southwest could give Samsung and SK Hynix access to stronger renewable energy resources, water supply, and space for future expansion.
| Investment area | Planned role |
|---|---|
| Samsung fabs | Two independently operated memory chip plants |
| SK Hynix fabs | Two independently operated memory chip plants |
| Regional infrastructure | Shared energy, water, transport, and support systems |
| Government support | Faster permits and large scale subsidies |
| AI memory production | Greater capacity for DRAM and high bandwidth memory |
| Data centers | Part of the larger national AI infrastructure strategy |
The government is reportedly trying to reduce approval delays and bring construction timelines forward. However, even with faster permitting, modern semiconductor facilities take years to design, build, equip, and qualify for production.
New capacity will not solve current memory shortages quickly
The proposed fabs are not expected to begin producing chips until the mid 2030s. That means the investment is unlikely to provide immediate relief for current shortages affecting RAM, SSDs, laptops, consoles, and other consumer electronics.
AI companies continue to secure long term supply agreements for memory and storage hardware, particularly for large data center deployments. That demand has made high bandwidth memory and advanced DRAM far more attractive for chip manufacturers than lower margin consumer products.
As a result, everyday buyers may continue to see higher prices for PC memory, solid state storage, gaming hardware, and budget electronics in the near term. The new South Korean facilities are a long term response aimed at expanding supply and protecting the country’s role in the global semiconductor industry.
South Korea is betting heavily on AI era chip demand
Samsung and SK Hynix have been rivals for decades, but both companies have a strong reason to expand quickly. AI infrastructure is creating a new race for memory capacity, especially for high bandwidth memory used alongside powerful AI GPUs and accelerators.
The planned fabs could give South Korea more influence over the future of AI hardware, while also helping both companies scale production for future demand. For consumers, though, the benefits may take years to arrive.
Until new factories are operating at full capacity, the pressure on memory prices is likely to remain.
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