Shares of Samsung Electronics and SK Hynix experienced a notable decline on Monday following the South Korean government’s announcement of expansive artificial intelligence and semiconductor mega-projects, which are projected to attract hundreds of billions of dollars in investments over the next several years.
Samsung’s stock dropped by 4.8%, while SK Hynix managed to shift from an initial near 6% dip to a final decrease of 1.6%. President Lee Jae Myung emphasized the urgency of bolstering South Korea’s semiconductor leadership and enhancing its artificial intelligence infrastructure through significant investments and new manufacturing capabilities. He stated that the nation must expedite its efforts to secure the critical technologies for the AI era ahead of its competitors.
As part of an ambitious 800 trillion won (approximately $518 billion) national semiconductor ecosystem initiative, both Samsung Electronics and SK Hynix will construct two new semiconductor fabrication plants in the southwest region of South Korea. Jung-Kwan Kim, the country’s minister of trade, industry, and resources, highlighted the expedited production approach, pledging to significantly reduce the timeline from licensing to construction.
This announcement follows a report from Maeil Business Newspaper, which indicated that Samsung Group plans to unveil a staggering 1,000 trillion won ($646 billion) investment strategy over the next decade. This ambitious blueprint is expected to encompass a wide array of sectors, including semiconductor fabrication facilities, AI data centers, advanced packaging, batteries, and displays. Within this investment plan, approximately 300 trillion won is earmarked for new semiconductor fabs in southwestern South Korea, with an additional 360 trillion won designated for the Yongin semiconductor cluster and over 350 trillion won allocated for AI data centers. However, the specifics regarding potential overlap among these figures remain unclear.
Both Samsung Electronics and SK Hynix have been positioned as key players in the surging demand for artificial intelligence, particularly as the need for high-bandwidth memory chips continues to surpass supply. Major cloud providers and technology firms are rapidly expanding their AI infrastructure, contributing to this demand. Notably, SK Hynix is the leading supplier of advanced high-bandwidth memory chips to Nvidia, while Samsung has been intensifying its efforts to bridge the technology gap with its domestic competitor.
