South Korea unveils $1tn chip and AI investment plan

South Korea has announced plans to invest around $1tn (£760bn) in the coming years to build the country’s chip manufacturing and artificial intelligence (AI) capabilities.

It is part of the country’s so-called three mega projects to develop new chip manufacturing centers, data centers and robotics technology.

The plan aims to revive the economy of areas outside the capital Seoul, President Lee Jae-ming said on Monday.

The AI ​​boom comes as regional rivals such as Taiwan, China and Japan invest heavily in chip factories and other technologies, boosting demand for semiconductors.

“We need to protect the core elements of AI faster than any other country,” Lee said. “Semiconductors, physical AI and AI data centers are the triple axis for a giant leap forward.”

Lee announced the plans on television alongside the leaders of Samsung and SK Hynix, the country’s two largest chipmakers.

The companies are expected to build a semiconductor manufacturing center in the southwestern part of the country.

Lee also announced plans to build other AI infrastructure centers outside of Seoul.

Earlier, Lee said in a statement that the project is a matter of survival for the country to overcome the decline in rural areas due to the increase of industries in Seoul.

“Now we must break this long cycle of discrimination and exclusion – not only for the sake of justice and equity, but also to ensure sustainable and inclusive growth,” he wrote.

Samsung and SK Group, which count AI chip giant Nvidia among their clients, are some of the biggest beneficiaries of spending on AI infrastructure.

US tech companies including Google, Amazon and Meta said they will spend $650 billion on the technology this year.

SK Hynix’s stock market value rose 1tn in May, driven by an increase in AI data centers.

The increase in demand for chips to power AI has led to a global shortage of semiconductors, driving up prices.

Last week, Apple and Microsoft raised the prices of some of their devices, due to higher component costs.

But some investors have raised concerns about the huge amount of money pouring into AI, which has sparked Some shares have slipped in recent days.