South Korea's government is in talks with Samsung Electronics and SK Hynix about the next phase of large-scale investment in chip manufacturing, a presidential adviser said on Wednesday, adding that an announcement on a new chip complex will follow soon.
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Statements by presidential policy adviser Kim Yong-beomframed the discussion less as a negotiation and more as an accounting problem that the country has yet to solve.
The pressure, Kim said on a panel discussion, comes from demand. The “exponential and explosive” growth in orders driven by the artificial intelligence industry could require the two companies to accelerate construction of new facilities by more than 10 years, bringing capacity to 2034 or 2035 earlier than planned. The timeline is being reshaped by how quickly the chips sell.
This raises a question that Kim was candid about. “Looking ahead to the next phase in seven or eight years, we face the challenge of finding a huge new site for a second complex,” he said.
The first cluster, the dense concentration of manufacturing plants south of Seoul, is the backbone of Korean memory production. A second, of similar scale, requires land, energy, and water on a scale that is not quickly amassed.
Beyond the timeline and the search for a venue, details remain unclear. Kim did not specify an amount in won or dollars in the discussions, and the talks are described as ongoing rather than complete.
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Korean media have reported that Samsung and SK Hynix are considering major investments in the country's southwestern region, with amounts potentially reaching hundreds of trillions of won, although these reports go further than what the presidential office has confirmed and should be read as an expectation rather than a commitment.
The political backdrop is President Lee Jae-myung ’s emphasis on balanced regional development, which has made the location of new industrial investments a matter of national policy rather than corporate preference. Directing a second chip cluster to an area outside the existing Seoul-area corridor would serve that goal, which is part of the reason the government is getting involved.
The numbers beneath the debate explain its urgency. Korea is on track for double-digit nominal growth for the first time in more than two decades, a pace driven almost exclusively by rising profits at its chipmakers. The boom is narrow, concentrated in two companies, and the same officials now debating where to build the next factories have spent the past few weeks worrying about where the revenue is going.
Kim himself warned this month that the rise in chip revenue risks being concentrated in real estate rather than wages or productive investment, and proposed a “normalization of property taxation” as a response. The issue of distribution has already become explosive once. Samsung’s largest union came close to a prolonged strike this year ahead of a government-brokered wage deal, and the broader debate over who will reap the benefits of artificial intelligence has become, in Seoul’s context, a matter of national politics. The very rise in chip sales that is accelerating factory construction is accelerating these discussions as well.
See also: Nvidia Hynix: Invests $3.87 billion in chip facilities in the US
For companies, the appeal of building with the government on their side is simple. New factories are among the most capital-intensive projects in the industry, and government support for land, licensing and infrastructure shortens the path. Demand for the high-speed memory that powers artificial intelligence accelerators has boosted both companies.
