South Korea announced an 800 trillion won ($518 billion) national semiconductor initiative that includes new fabrication plants by Samsung Electronics and SK Hynix, marking one of the country's largest industrial investment programs as governments continue to strengthen critical technology supply chains.
Shares of Samsung Electronics fell 4.8% Monday, while SK Hynix closed down 1.6% after recovering from steeper early losses of nearly 6% following details of the investment plan.
President Lee Jae Myung announced the investment strategy Monday, saying South Korea must move more quickly than competitors to secure leadership in technologies supporting the AI era. The government said Samsung Electronics and SK Hynix will each construct two new semiconductor fabrication plants in the country's southwest as part of the national semiconductor ecosystem project, CNBC noted.
"We will rapidly expand our production capacity by drastically shortening the timeline from licensing to construction," Trade, Industry and Energy Minister Jung-Kwan Kim said.
Samsung Electronics and SK Hynix have become central suppliers in the AI hardware market as demand for high-bandwidth memory (HBM) chips continues to rise. SK Hynix currently supplies advanced HBM chips to Nvidia, while Samsung has expanded investments aimed at strengthening its competitiveness in the segment, Reuters reported.
The South Korean government's latest initiative comes as countries increase domestic semiconductor production following years of supply chain disruptions and tighter export restrictions on advanced chip technologies. The United States, the European Union, Japan and South Korea have each introduced large-scale incentives to expand chip manufacturing capacity and reduce reliance on concentrated production hubs.
The semiconductor sector has also taken on greater strategic importance as conflicts and geopolitical tensions continue to reshape global supply chains. The war in Ukraine, instability affecting global shipping routes and ongoing technology restrictions between the United States and China have prompted governments and manufacturers to diversify production and strengthen domestic capacity for advanced semiconductors, according to The Financial Times.
South Korea remains one of the world's leading producers of memory chips, with Samsung Electronics and SK Hynix accounting for a significant share of global DRAM and NAND flash memory production.
