South Korea unveils $1 trillion AI, chip drive to boost tech leadership

South Korea has announced plans for nearly $1 trillion in government-backed and private-sector investments to expand semiconductor production, build artificial intelligence (AI) data centers and accelerate the commercial deployment of humanoid robots by 2028, as the country seeks to cement its position as a global technology leader.

The initiative comes amid soaring demand for AI-powered technologies, which has driven record profits for South Korean chipmakers and intensified global shortages of high-performance memory chips, as per ARS Technica. 

"We must secure the core elements of AI faster than any other country," South Korean President Lee Jae Myung said in a televised speech on June 29.

The largest investment, worth about $585 billion, will see Samsung Electronics and SK Hynix build new semiconductor fabrication plants in southwestern South Korea while expanding existing manufacturing capacity near Seoul. The government aims to double domestic production of dynamic random-access memory (DRAM) chips within five years.

The expansion is expected to help ease supply constraints caused by booming AI demand, although industry leaders have warned that constructing new fabrication facilities will take years.

A second project involves $357 billion in investments by SK Group, GS Group and Naver to develop large-scale AI data centres across several provinces outside the capital region.

To support the new infrastructure, the government plans to secure additional electricity and water supplies, relying on a mix of renewable energy, nuclear power and fossil fuels.

South Korea is also placing a major emphasis on "physical AI"—artificial intelligence systems designed to power robots and autonomous vehicles.

Hyundai Motor Company has committed $5.8 billion to build a robot manufacturing facility and AI data centre in the country's southwest. The automaker is working with its subsidiary, Boston Dynamics, to scale production of Atlas humanoid robots, with a target of manufacturing 30,000 units annually by 2028.

The government also plans to commercialise humanoid robots across 10 major industries by 2028 while training 10,000 AI robotics specialists over the next five years.

However, the ambitious plans have also raised concerns over employment and the distribution of AI-driven profits.

Hyundai Motor's labour union recently approved a potential strike during negotiations over profit-sharing and job protections linked to the company's planned deployment of humanoid robots in its factories.

At the same time, policymakers have urged major technology firms benefiting from the AI boom to share more of their record earnings with workers and smaller suppliers.

By Sabina Mammadli