South Korea unveils $880 billion plan to expand AI and semiconductor industry

South Korea has rolled out a large-scale industrial roadmap centred on semiconductor manufacturing, artificial intelligence and data centre infrastructure, with planned investments of at least 1,350 trillion won, or about $880 billion, over the coming years.President Lee Jae Myung announced the initiative on Monday, describing semiconductors, physical AI and AI data centres as the three key pillars of the country's next phase of industrial growth. In a televised address, he said South Korea must move faster than its competitors to secure technologies that will shape the AI era.As part of the programme, Samsung Electronics and SK Hynix, the world's two largest memory chipmakers, will invest 800 trillion won together with suppliers to establish two semiconductor fabrication plants each in the country's southwest. Industry Minister Kim Jung Kwan said the government also expects another 81 trillion won to be invested in a semiconductor packaging cluster in the Chungcheong region near Seoul.Lee said Gwangju and South Jeolla province will contribute between 5 trillion won and 20 trillion won towards the semiconductor projects. He added that the southwest was chosen partly because of its untapped power resources and said the new facilities would help spread industrial growth beyond the Seoul metropolitan region.Alongside chip manufacturing, the government announced plans to significantly expand AI infrastructure. Companies including SK Group, GS Group and Naver will invest 550 trillion won to develop AI data centres with a combined capacity of 8.4 gigawatts by 2029.Also Read: 'Just getting started': Amazon CEO Andy Jassy meets PM Modi, announces additional $13 billion India investmentScience Minister Bae Kyung Hoon said the country plans to add a 10 gigawatt AI data centre by 2035, taking total planned investment in AI data centres to more than 1,000 trillion won.The government said the broader strategy is intended to strengthen South Korea's competitiveness in semiconductors and AI while supporting economic growth outside Seoul.The plan has drawn criticism from the opposition, which questioned the decision to establish another semiconductor cluster in the southwest, arguing the move is influenced by regional politics rather than commercial considerations. Critics also alleged that memory chipmakers were being encouraged to invest in the region instead of selecting locations based solely on business needs.Lee rejected those claims and defended the proposed semiconductor hub, saying the project is aimed at supporting balanced regional development while preparing the country for future AI-driven industrial demand.