[MARKET ANALYSIS] South Korean AI/Chip spending plan, USD 576bln initial AI investment plan. Samsung Electronics (005930 KS) and SK Hynix (000660 KS) heavily involved.

• South Korea announced a new AI and chip spending package, which includes huge investment from the likes of Samsung Electronics (005930 KS) and SK Hynix (000660 KS); initial USD 576bln AI investment plan.

South Korea:

• The package is titled, “Semiconductors, physical AI, and AI data centres are the three pillars for a great leap forward”. The total plan includes promoting a semiconductor fab worth KRW 800tln, 81tln in a packaging hub and 550tln to build AI data centres. This is worth c. USD 930bln total.
• With this package, the country aims to double DRAM production capacity in five years.
• President Lee stated that “we must secure core AI elements faster than any other country”. He added that “the outcomes of the three mega projects we are building will shape South Korea’s next 20 to 30 years”.

Samsung Electronics & SK Hynix:

• Samsung and SK Hynix will invest a total of KRW 800tln to establish a “second semiconductor base”; it would allow the co. to build a new production facility in Honam.
• Samsung plans to invest “more than” KRW 110tln (USD 73bln) on chip capacity expansion and research this year, which would mark a 22% increase from the prior year. The Co. also unveiled plans to invest KRW 1100tln in AI data centres. The breakdown of such plan is: KRW 600tln to expand DRAM production, 100tln to expand NAND production and 400tln to create a new cluster.
• Samsung Chairman outlined that they intend to have a HBM fab in Chungcheong, Gwangju as a base for chip production and robots investment within Gumi. Current capacity is not sufficient for demand.
• SK Hynix’s Chairman stated that, “with SK Telecom at the center, we will build data centres with a total capacity of 15 gigawatts across regions”. He added that, In phase one, we will split 5 gigawatts of AI data centres into 0.5 to 1 gigawatt units in various areas with power and land to build them as quickly as possible, and in phase two, we will sequentially expand AI data centres to 10 gigawatts.