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Gov't outlines 7 trillion won plan to build chip cluster as Korea races to become global AI powerhouse

Published: 10 Dec. 2025, 18:52

SARAH KIM
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President Lee Jae Myung, center, speaks during a public-private meeting to discuss plans to develop Korea’s semiconductor industry at the Yongsan presidential office in central Seoul on Dec. 10. [JOINT PRESS CORPS]

President Lee Jae Myung pledged to do his utmost to develop Korea's AI chip industry in a fair and balanced way, as his government unveiled its plan to invest at least 700 trillion won ($476 billion) into a regional production cluster as a part of its vision to become the No. 2 global semiconductor powerhouse.

Lee also stressed, as he convened a private-public meeting attended by related business executives and officials at the Yongsan presidential office in central Seoul, that his government is "preparing practical measures" to address the separation of industrial and financial capital regulations, considered a major obstacle for large-scale investments in advanced technology industries such as AI and semiconductors.

The government has been looking to ease the separation of financial and industrial capital regulations, which block conglomerates from owning a controlling stake in banks and other financial institutions.

"We are preparing practical measures within the scope of not undermining the separation of financial and industrial capital, and it seems that it is almost there," Lee said.

The current restrictions are to "prevent damages from a monopoly," he said, but added that "in advanced industries that require massive investments, those concerns have essentially become outdated, and such restrictions may even hinder industrial development. He said his government is "already preparing institutional measures."

The government rolled out its comprehensive strategy to maintain its market lead in next-generation memory chip technologies amid intensifying global competition in the AI semiconductor market. The vision included securing chip technology and production sovereignty, strengthening the semiconductor ecosystem, expanding the supply chain and personnel and establishing a southern region innovation belt.

"The development of the industrial economy is essential, and our country especially holds a competitive edge in the chips sector," Lee said. "The government will do its utmost to develop the semiconductor industry."

"While expanding the overall pie is a crucial prerequisite, I hope that this pie will be shared more diversely with a wider range of people," he said. "In the longer term, this will also be helpful for the growth of individual companies."

Through his remarks, Lee appeared to be calling not only for expanding the AI chip industry but also for ensuring fair growth and an even distribution of such development.

SK hynix CEO Kwak Noh-Jung, center, speakts at a public-private meeting to discuss ways to develop Korea’s semiconductor industry to become an AI powerhouse at the Yongsan presidential office in central Seoul on Dec. 10. [JOINT PRESS CORPS]

The meeting on advancing "K-semiconductors" focused on ways to usher in an AI-powered era and was attended by some 40 executives from top conglomerates and startups, chip experts and related officials to discuss deregulation and other policies to support the AI and semiconductor industries. Participants from the private sector included SK hynix CEO Kwak Noh-Jung, Samsung Electronics Vice Chairman and CEO Jun Young-hyun and ASML Korea CEO Choi Han-jong.

Industry Minister Kim Jung-kwan unveiled the government's plan to invest 215.9 billion won by 2032 in developing next-generation memory chip technologies, going beyond high-bandwidth memory (HBM).

Another 1.27 trillion won will go toward developing AI semiconductors by 2030, 260.1 billion won into compound semiconductors by 2031, and 360.6 billion won into advanced packaging technologies by 2031.

Kim also announced that a mega cluster in Gyeonggi's Yongin, Hwaseong and Pyeongtaek will see 700 trillion invested by 2047, along with special provisions for expedited permit processing, as part of the country's vision to build the world's largest semiconductor production hub in Gyeonggi.

During his briefing, Kim called the global semiconductor competition a "war," noting that China and the United States are pouring exponential amounts of money into the chip industry.

Industry Minister Kim Jung-kwan, right speaks on the government strategy to develop the semiconductor industry at the Yongsan presidential office in central Seoul on Dec. 10. [JOINT PRESS CORPS]

In turn, Lee said that the government is preparing to provide support in areas such as taxation, regulation and infrastructure development for companies that operate in a manner consistent with his balanced regional development vision.

Lee noted that Korea's southern regions are rich in renewable energy and urged companies to "build a new industrial ecosystem there" that the government will also "introduce groundbreaking policies to this end."

The government has pushed to expand the semiconductor industry base from the Seoul metropolitan area to the entire nation, including Gwangju as a special cluster for advanced chip packaging, Busan as a power semiconductor production base, and Gumi as a hub for chip materials and parts.

Lee urged the participants to "work together to find ways for companies, people and the nation to survive."

BY SARAH KIM [[email protected]]