South Korea’s Samsung conglomerate has revealed a plan to invest a substantial $310 billion in the next five years, primarily focusing on AI technology to cater to the rising global demand. Samsung Electronics, the group’s leading entity, is already a major player in the memory-chip manufacturing sector, supplying crucial components to fuel the AI industry and its associated infrastructure.
In addition to Samsung, South Korea is also home to SK hynix, another significant participant in the global semiconductor market. The investment initiative includes the construction of a new semiconductor plant, Pyeongtaek Plant 5, specifically tailored to address the increasing memory-chip requirements. Samsung anticipates that the Pyeongtaek facility, once fully operational, will play a vital role in both the worldwide semiconductor supply chain and the local chip ecosystem in South Korea. The new production line is projected to commence operations in 2028.
Samsung SDS, the conglomerate’s IT and logistics division, is set to establish two AI data centers in South Jeolla and Gumi, with specifics yet to be disclosed. Notably, Samsung Group comprises a network of interconnected companies with shared ownership under the Samsung umbrella, as opposed to a single legal entity, and stands as South Korea’s largest chaebol, dominant in the nation’s economy.
The $310 billion investment strategy encompasses projects beyond AI. For instance, Samsung SDI, the electric-vehicle battery arm of the company, is considering setting up a domestic production line for cutting-edge batteries, including all-solid-state batteries. The surge in AI activity has significantly benefited Samsung Electronics and SK hynix, as their top-notch memory chips have become indispensable for AI computing operations. Samsung Electronics reported a notable profit surge of over 30 percent year-on-year in the third quarter, driven by the escalating demand fueled by AI technologies.
Global AI-related expenditures are on the rise, raising concerns about overvaluation in the tech sector and the potential for an AI market bubble akin to the dot-com bubble of the early 2000s. This investment announcement follows South Korea’s government commitment to triple its AI spending next year, with President Lee Jae Myung aiming to position the country among the top three AI leaders globally, trailing only the United States and China.