A presidential adviser says AI demand could pull forward the next phase of fab construction by more than a decade, and that the country needs somewhere to put it.
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 cluster would follow soon.
The remarks, from presidential policy adviser Kim Yong-beom, framed the conversation less as a negotiation than as a logistics problem the country has not yet solved.
The pressure, Kim told a discussion panel, comes from demand. “Exponential and explosive” growth in orders driven by the AI industry could require the two companies to speed up construction of new facilities by more than 10 years, bringing forward to 2034 or 2035 capacity that had been planned for later. The schedule is being rewritten by how fast the chips are selling.
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That creates a question Kim was candid about. “Looking ahead to the next stage after seven or eight years, we are faced with the challenge of finding a massive new site for a second cluster,” he said.
The first cluster, the dense concentration of fabrication plants south of Seoul, is the spine of Korean memory production. A second one of comparable scale needs land, power, and water on a scale that does not assemble itself quickly.
Beyond the timeline and the search for a site, the specifics remain thin. Kim did not attach a won or dollar figure to the discussions, and the talks were described as ongoing rather than concluded.
Korean outlets have reported that Samsung and SK Hynix are weighing major investments in the country’s south-western region, with figures potentially running into the hundreds of trillions of won, though those reports go further than the presidential office has confirmed and should be read as expectation rather than commitment.
The political backdrop is President Lee Jae-myung’s emphasis on balanced regional development, which has made the location of new industrial investment a matter of national policy rather than corporate preference.
Steering a second chip cluster toward a region outside the existing Seoul-area corridor would serve that goal, which is part of why the government is in the room at all.
The numbers underneath the conversation explain its urgency. Korea is on course for double-digit nominal growth for the first time in more than two decades, a pace driven almost entirely by the soaring profits of its chipmakers.
The boom is narrow, concentrated in two companies, and the same officials now discussing where to build the next fabs have spent recent weeks worrying aloud about where the proceeds end up.
Kim himself warned this month that the chip windfall risks pooling in real estate rather than wages or productive investment, and floated a “normalisation of property taxation” in response.
The distributional question has already turned combustible once. Samsung’s largest union came within days of an extended walkout this year before a government-mediated pay deal, and the wider debate over who captures the AI windfall has become, in Seoul’s framing, a matter of national policy.
The same chip surge that is pulling forward fab construction is pulling forward those arguments too.
For the companies, the appeal of building with the state alongside them is straightforward.
New fabs are among the most capital-intensive projects in industry, and government support on land, permitting, and infrastructure shortens the runway.
Demand for the high-bandwidth memory that feeds AI accelerators has lifted both firms, with SK Hynix riding the HBM cycle hardest, and neither will want to be short of capacity when the next wave of orders lands.
What was announced on Wednesday, in the end, was that an announcement is coming. The shape of the second cluster, its location, its cost, and how the bill is split between the companies and the state, are the things still to be settled.
For now, Seoul has confirmed the talks are happening and the clock is running faster than the plans were drawn for.
