Korea’s Semiconductor Investment Surges Amidst Global AI Boom

South Korea is significantly increasing its investment in semiconductor fabrication, driven by the escalating global demand for artificial intelligence (AI) infrastructure. Forecasts indicate that major technology companies will collectively invest over $1 trillion in the AI field by next year, fueling an upcycle in the memory market and prompting substantial investment from memory manufacturers, particularly in DRAM and High Bandwidth Memory (HBM).

Global Tech Investment in AI

Clark Cheong, Senior Director of Semiconductor Equipment and Materials International (SEMI), predicts that the combined capital expenditure (capex) of Microsoft, Alphabet, Meta, and Amazon will rise to $650 billion this year and exceed $1 trillion next year. This trend is expected to continue for an extended period, far beyond just one or two years.

Korea’s Fab Investment and Export Growth

Korea’s annual investment in semiconductor fabrication is projected to reach $40 billion (58 trillion won) from 2026 to 2028, with over 80% of this investment focused on memory production. Korean semiconductor exports in 2025 totaled $173.4 billion, a 22.2% increase year-over-year, attributed to the reallocation of memory capacity to meet AI demand.

Deepening Integration into the AI Supply Chain

Exports to Taiwan reached 64.8% during this period, indicating a deeper integration of Korean memory into the AI accelerator and Graphics Processing Unit (GPU) supply chain. This signifies a shift in the semiconductor landscape, with increased silicon usage in AI servers and related infrastructure.

Government Initiatives and Industry Collaboration

Korea is launching a 1 trillion-won ($687.8 million) project in March 2026 to develop AI semiconductors for on-device use. The government and private companies will collaborate over five years to create approximately 10 AI chips for applications in self-driving cars, smart home appliances, and humanoid robots. This initiative is part of the Manufacturing AX (M.AX) Alliance, which includes over 1,000 companies and research institutes, such as Samsung Electronics, Hyundai Motor, LG Electronics, and Rainbow Robotics.

SK Hynix Expands AI Focus in the U.S.

SK Hynix is establishing a new U.S.-based company, tentatively named “AI Company or AI Co.,” with a commitment of at least $10 billion to focus on artificial intelligence solutions. This expansion is driven by SK Hynix’s leadership in High Bandwidth Memory (HBM) chips, crucial for AI chipsets. The company will restructure its California-based subsidiary Solidigm to form the new AI-focused entity.

Semicon Korea 2026 Highlights Innovation

The Semicon Korea 2026 exhibition, Korea’s largest semiconductor event, showcased an expanded scale reflecting the industry’s current boom.

The collaboration between Taiwan and South Korea is emerging as a critical hardware partnership in the AI era, with each nation specializing in distinct areas of semiconductor technology.