Original | Odaily Planet Daily (@OdailyChina)
Author | Azuma (@azuma_eth)
South Korea's presidential office said on Sunday that Samsung Group and SK Group will announce major investment plans at a meeting hosted by President Lee Jae-myung on Monday. Relevant information will be disclosed at a briefing scheduled for 2 p.m. on Monday, Korea time (1 p.m. Beijing time) at the Blue House. Samsung Group Chairman Lee Jae-yong and SK Group Chairman Chey Tae-won will both attend the event.
Today, the Korean media outlet Maeil Economic Daily disclosed more details about the plan.
According to the report, as part of President Lee Jae-myung's flagship industrial strategy, Samsung Group and SK Group are expected to jointly announce an investment plan with a total scale of up to 2,000 trillion won (approximately 1.3 trillion USD). Over the next decade, the two companies will continuously increase their investment in South Korea's domestic semiconductor industry. Samsung and SK Hynix are expected to build 4 to 5 semiconductor plants each in Gwangju. Samsung also plans to build a chip packaging plant in South Chungcheong Province, while SK Hynix will expand its NAND factory in North Chungcheong Province.
As of the time of writing, the South Korean government and the two companies have not officially announced the complete plan details. Final specifics are still subject to adjustment. However, judging from recent signals released by the South Korean government and information disclosed by Korean media, the direction of "continuing to heavily invest in semiconductors for the next decade" is already almost certain.
The significance of this matter extends far beyond the expansion plans of Samsung and Hynix, the two memory giants. Taking a broader view, this is an industrial strategic deployment personally led by the South Korean government and also South Korea's public bet on the AI era.
Over the past few years, the race around large model training and AI data center construction has intensified. One of the key infrastructures supporting this race is high-performance memory. As a core force in the global memory industry, South Korea has consistently held the most irreplaceable link in the AI industrial chain.
Now, by pushing Samsung and SK Hynix to launch a trillion-dollar, decade-spanning investment plan, they are essentially sending a clear signal to the market — South Korea believes that the demand for high-performance memory driven by AI is not a short-lived boom cycle, but an industrial wave sufficient to last for a decade or even longer. Therefore, they are willing to bet on this judgment with capital expenditure for the next ten years.
Why Does South Korea Dare to Place Such a Big Bet?
What does 1.3 trillion USD mean?
South Korea's total Gross Domestic Product (GDP) for the full year 2025 was approximately 1.87 trillion USD. In other words, the scale of this investment plan is close to nearly 70% of the country's total economic output for an entire year. As the main investment entities in this plan, Samsung's current market value is about 1.34 trillion USD, while SK Hynix's market value is about 1.2 trillion USD. This means these two pillar-level Korean chaebols will invest half of their current worth into the expansion plan for the next decade.
Why does South Korea dare to place such a large bet on the highly cyclical memory industry? The answer lies in the changes that have occurred in the memory industry over the past year.
For decades, memory has been one of the most cyclical segments of the semiconductor industry. The industry has almost always followed the same pattern — demand growth drives up prices, manufacturers expand production aggressively, new capacity comes online leading to oversupply, prices eventually plummet, and then the cycle repeats. Because of this, most semiconductor companies rarely plan capacity on a ten-year timescale.
The change began with AI. As AI competition intensified, with models growing larger and inference demand continuously increasing, the market gradually realized that what truly limits further improvement in AI computing power is not just GPUs, but also High Bandwidth Memory (HBM). GPUs determine the upper limit of computing power, while HBM determines whether GPUs can truly perform to their potential. This has made memory bandwidth one of the bottlenecks for AI computing expansion. The larger the model, the more parameters, and the more frequent the inference, the higher the demand for high-bandwidth, high-capacity memory.
Simply put, the rapid development of AI has placed memory, once a relatively low-profile supporting player, under the spotlight at the center of the entire industrial chain for the first time.
This change was quickly reflected in the industry and capital markets. Massive orders from global AI chipmakers, cloud computing giants, and hyperscale data center operators have turned SK Hynix, Samsung, Micron, and other memory giants into the biggest recipients of global AI capital expenditure. The rapid climb in performance and forward guidance has constantly refreshed market expectations for the valuation of the memory sector.
Faced with surging market demand, orders for HBM from the three major manufacturers are generally booked for several years into the future. The entire industry is continuously raising capital expenditure, hoping to release more advanced capacity as soon as possible to capture a larger market share.
This is precisely why Samsung and SK Hynix increasing their expansion is not surprising in itself. The different point this time is that it's not just the companies stepping into the spotlight, but also the South Korean government. Clearly, what South Korea aims to solidify is not just the market share of Samsung and SK Hynix, but also South Korea's strategic position in the global AI infrastructure.
Can South Koreans Win?
Of course, this grand ten-year investment plan inevitably raises a question that all memory investors continuously focus on — does the memory industry still have cyclicality? Or, should memory stocks continue to be valued as cyclical stocks?
Over the past few decades, the market has long been accustomed to the operating patterns of the memory industry: demand explosion, price increase, aggressive expansion, oversupply, price crash, and then entering the next cycle... Precisely because of this, memory companies have long struggled to receive the valuation premium of growth stocks.
However, the emergence of AI has challenged this logic for the first time. The demand for high-performance memory driven by AI far exceeds any previous technological iteration in history. Moreover, for the same capacity increase in HBM, it consumes much more wafer production capacity compared to traditional DRAM. This means that even if the three major manufacturers continue to expand, it will take longer for the new supply to be truly released — which is also why, even today, the market generally believes that the tight supply-demand situation for HBM will continue for several more years.
But on the other hand, this also does not seem to prove that the cycle has disappeared. If the new capacities of the three major manufacturers gradually come online in the coming years, and AI demand growth also begins to slow down, then the supply-demand imbalance supporting today's high profitability and valuations might eventually gradually return to balance.
In other words, AI may change the length of the cycle, but it may not change the cyclical nature itself.
The answer South Korea gives today is a willingness to bet on the continued growth of AI's demand for memory with capital expenditure for the next decade. As for whether this means the memory industry has bid farewell to cycles or is ushering in an unprecedented super cycle, perhaps only time will tell.
