June 26, 2026, (Inside AI) — Samsung Group will pledge 1,000 trillion won ($648 billion) in South Korea over the next decade, according to a media report, aiming to transform a global AI-driven chip boom into a nationwide growth engine.
Top executives from Samsung Electronics and SK Hynix will attend a meeting with President Lee Jae Myung on Monday to outline investment plans targeting regions beyond Seoul, the Maeil Business Newspaper reported Friday. The spending includes AI data centers, batteries, displays, and a potential 300 trillion won push for chip factories in the country’s southwest.
The initiative highlights South Korea’s race to convert surging AI-driven chip demand into broader economic gains outside the capital. Yet infrastructure limits and labor shortages threaten to complicate efforts to redraw the industrial map.
Production facilities concentrated around Seoul have long drawn political pressure, amplified by Lee’s push for balanced regional development. Policy adviser Kim Yong-beom said the government will unveil “three mega-projects” spanning semiconductors, AI data centers, and robotics, with significant investment expected. Samsung and SK Hynix declined to comment.
The Battle to Build Beyond Seoul
South Korea dominates global manufacturing of high-end memory chips, crucial for AI data centers. Samsung Group, the country’s largest conglomerate, counts Samsung Electronics, Samsung SDI, and Samsung SDS among its key firms.
Kim Yong-beom noted that Samsung and SK Hynix may need to accelerate projects slated for the 2040s to the mid-2030s. AI-driven memory demand is growing faster than expected, leaving no room, power, or water in the capital region for expansion. Further concentration risks inflating property prices and widening inequality.
However, experts question the wisdom of a southwestern chip hub. Kim Tae-yun, a professor at Hanyang University, said securing skilled workers will be extremely difficult there.
“That will determine whether the project succeeds or fails,” he said. “Unless a truly cutting-edge fab is built, the local economic impact will be limited—it risks becoming little more than a construction project and a real estate boost.”
Politics, Pledges, and Local Fears
Semiconductor investment became a flashpoint ahead of South Korea’s June 3 local elections. Candidates pitched their regions as the next chip hub, with proposals ranging from a 500 trillion won complex in the southwest to expanded clusters elsewhere.
Lee’s approval rating fell to 51%, the lowest since his inauguration, Gallup Korea said Friday. The debate has stirred concern in existing chipmaking cities like Icheon, where SK Hynix operates major plants.
“Most of the city’s tax revenue comes from SK’s chip plant, and our welfare depends on it,” said Jo Jun-taek, head of a grassroots group in Icheon. “If a new cluster is created, we think SK will likely cut output here and eventually close the plant. That would cause an outflow of people—the city would become a ghost town.”
Lee has promoted “five regional hubs and three special self-governing provinces” to counterbalance Seoul’s dominance, which accounted for 52.8% of the country’s gross regional domestic product in 2024. The disparity is stark in Gwangju, a southwestern city with below-average per-capita output. Local media report Samsung Electronics is considering Gwangju as a potential site.
Lee won 49.42% of the national vote in the June 2025 presidential election but secured about 85% in Gwangju and neighboring South Jeolla. The opposition People Power Party accused the administration of politicizing investment. “Where semiconductor factories are built should be decided by companies, not by the president,” PPP spokesperson Park Sung-hoon said this week.
