Samsung and SK Hynix’s mega South Korea chips gamble tests optimism of AI cycle

Samsung Electronics and SK Hynix pledged 3,200 trillion won ($2.07 trillion) in investments to expand South Korea's memory chip production capacity, betting on sustained AI demand. The plan aims to double memory chip output within five years and accelerate fab construction, despite fears of a downturn if AI spending cools.

Seoul – Samsung Electronics and SK Hynix are making one of the biggest bets yet on the artificial intelligence boom with investments worth hundreds of billions of dollars, but the planned capacity buildout is stoking fears of a painful reckoning if AI spending cools. The tech giants won praise — and a deep bow — from President Lee Jae Myung after throwing their weight behind the government’s semiconductor push, in an apparent departure from a previously restrained approach to capacity expansion shaped by decades of painful boom-and-bust cycles in the memory industry. Under the plan, the government hopes South Korea can double its memory chip production capacity within five years. Samsung and SK Hynix will also accelerate construction of fabs in the existing Yongin semiconductor cluster, shortening the 7-12 year timelines and bringing additional capacity online sooner. Together, the world’s two biggest memory chipmakers pledged 3,200 trillion won $2.07 trillion of investment, encompassing a new 800 trillion won chip cluster in the country’s southwest as well as previously announced projects. South Korea is emerging as a major winner from the surge in global AI investment, driven by Samsung Electronics and SK Hynix’s commanding position in high-bandwidth memory HBM chips essential to advanced AI processors. Shares of SK Hynix and Samsung Electronics have gone up 307% and 179%, respectively, so far this year.