South Korean semiconductor giants Samsung and SK Hynix have committed nearly USD 583 billion to construct two new fabrication sites, according to a report in the Korea Herald. The investment includes four memory fabs in the southwest region and advanced packaging plants in North and South Chungcheong provinces, as announced during a Presidential briefing.
Global memory chip shortage fuels 'chipflation'
The move comes amid a worldwide shortage of memory chips, which has driven what Morgan Stanley coined as 'chipflation'. The investment bank reported that memory chip prices have surged six-fold over the past year, driven by insatiable demand from AI data centres. Apple recently raised prices on MacBooks and iPads due to the crisis, with CEO Tim Cook telling the Wall Street Journal that the price hike was 'unavoidable' despite efforts to shield customers.
Government backing with 3S+1F strategy
Industry Minister Kim Jung-kwan emphasized the need for new semiconductor bases, stating, 'Korea can no longer rely on a single capital-region chip belt.' He called the expansion the backbone of the AI era and Korea's 'last chance' to escape low growth. The government will fully support the initiative with a 3S+1F strategy—speed, stronghold, spearhead, plus a full-support system from central and local authorities.
AI boom benefits Samsung and SK Hynix
Samsung and SK Hynix have been major beneficiaries of the AI boom, producing high-bandwidth memory chips in high demand by hyperscalers such as Amazon, Alphabet, and Microsoft, which are ramping up capital spending to expand data centre capacity. Despite this, shares of SK Hynix fell 1.68% and Samsung dropped 4.76% on Monday, following a more than 5% decline in the Philadelphia Semiconductor Index on Friday. While investors have rewarded semiconductor stocks, propelling SK Hynix, Samsung, and Micron into the trillion-dollar valuation club, concerns remain over rising AI costs and soaring valuations.
