Turning a military airport into a chip factory is a nation betting its fate.
On August 10, 2026, South Korean President Lee Jae-myung chaired the second joint public-private inspection meeting for the "Three Super Projects" at the Blue House, where he immediately ordered the Ministry of National Defense: By mid-2028, all functions of the Gwangju Military Airport must be temporarily relocated to other military bases to free up land for constructing the Honam Semiconductor Industrial Cluster in the Jeolla region. His exact words were— "A war of speed is not enough; we must fight a blitzkrieg." Meanwhile, his approval rating had just hit a historic low since taking office: 43.3%, declining for the fourth consecutive week.
Faced with plummeting poll numbers on one side and the all-out pursuit of AI chips on the other, Lee Jae-myung chose the latter.
A Gamble with the Nation's Destiny at Stake
Lee Jae-myung set an extremely clear goal for this industrial offensive: using semiconductors, physical AI, and AI data centers as the "three pillars" to double South Korea's DRAM production capacity within five years, build two new fabs each for Samsung and SK Hynix, with a total investment scale of about 800 trillion won. Meanwhile, the South Korean government plans to invest over 1,000 trillion won in the AI data center sector by 2035, and another 81 trillion won in building an advanced chip packaging industrial cluster in the Chungcheong region.
Vacating the Gwangju Military Airport is the most symbolic move in this chess game.
At the meeting, he specifically singled out Japan's Kumamoto model for comparison— "The Honam Semiconductor Cluster in Jeolla must proceed at a pace no slower than Japan's Kumamoto." Kumamoto is the benchmark case of TSMC's expansion into Japan, taking only about two years from groundbreaking to production, setting a global speed record for semiconductor base construction. Lee Jae-myung's message is clear: South Korea cannot be slow.
He said, "The prologue to South Korea's golden era has begun. The next year is a golden window period; we must go all out."
The Two Parallel Tracks Facing Lee Jae-myung
On one track, with the will of the state, he mobilized military resources to vacate an airport for a chip fab, rallied Samsung and SK Hynix, planned an industrial investment blueprint worth thousands of trillions of won for the next decade, declared "AI is a blitzkrieg," and demanded the government must "meet an extraordinary situation with extraordinary force." On the other track, due to controversy over property tax reforms, turmoil over prosecutorial power legislation, persistent heatwaves, and a series of policy and public opinion pressures, his public approval rating dropped to 43.3%, falling for four consecutive weeks.
He attempted to use the industrial narrative of AI and semiconductors to rebuild social consensus—at the meeting, he specifically mentioned that the ultimate goal of the super projects is not to concentrate outcomes in a few companies and regions, but to extend the axis of growth nationwide, redrawing the advanced industrial map to be "centered on regions." He also demanded prevention of the polarization of a "K-shaped growth" and ordered the government to study countermeasures in advance. He said, "The excess tax revenue in the AI era will be injected into a newly established Future Response Fund, directed towards youth, regions, and growth engines."
But the reality is, the slogans of the "Golden Era" coexist simultaneously with 1.2 million retail accounts hitting margin call limits.
An analyst at CLSA offered this line: "KOSPI has lost its price discovery mechanism."
In that market, the discussion is no longer about the supply and demand of memory chips, nor about calculating the return on investment for AI capital expenditure—it's leveraged ETFs selling, margin calls being issued, accounts being force-liquidated. The fundamentals don't even get a chance to speak before the orders are executed.
Lee Jae-myung's bet in this AI battle is staked on South Korea's industrial landscape for the next two to three decades. Vacating the military airport, building the fabs, erecting the data centers—this logic might not be wrong from an industrial perspective.
But this summer, the first to be swept up in this "AI Golden Era" were the 360,000 ordinary accounts that have already been force-liquidated, unable to wait for any rebound.
Ordinary Korean Investors Are Experiencing a Different Reality
While Lee Jae-myung was loudly proclaiming a golden era, ordinary Korean investors were experiencing a different reality this summer.
In the first half of this year, the KOSPI index soared from 4300 points to 9385 points, a 116% gain, leading the world. The narrative was smooth as a perfect story: The AI wave drives explosive demand for computing power; HBM is the core bottleneck; only three companies globally can mass-produce it, and South Korea has two of them—Samsung and SK Hynix. Buying the Korean stock market was buying into the most certain beneficiaries of AI.
So the whole nation plunged into the market. The Korean government approved 2x leveraged ETFs linked to Samsung and SK Hynix, which retail investors flocked to, with assets under management soaring from 5 trillion won to 76 trillion won in two months. Leveraged products took all top twelve spots for returns in the first half, with the top performer gaining 764%.
A story circulated on social media: A Korean girl told her friend, "This is the best summer since I became an adult." She had just started a job, threw all her salary into the stock market, and earned five years' worth of salary. She said, "It feels like a human golden age illusion."
Note—she used the word "illusion."
On July 16, KOSPI fell below 6800 points during trading, officially entering a technical bear market. The same day, the Bank of Korea announced a 25 basis point interest rate hike amidst the plunge. On the "Black Tuesday" of July 28, KOSPI dropped over 10% in a single day, falling below 6000 points, with Samsung down over 13% and SK Hynix down over 14%, triggering circuit breakers. On July 29, it fell another nearly 6%, closing at 5663 points, with circuit breakers triggered for two consecutive days. From the peak of 9385 points to 5663 points, a full 40% decline.
In a bear market, the mechanism of leveraged ETFs turned into a "meat grinder"—as stocks fell, the funds had to mechanically sell off holdings to maintain 2x leverage, which accelerated the decline.
Analysts at Citi estimated that South Korean retail investors incurred cumulative losses of about 56.3 trillion won, equivalent to $387 billion, on leveraged ETFs. Over 1.2 million leveraged accounts hit margin call limits, with approximately 350,000 to 460,000 accounts forcibly liquidated by brokers, their principal wiped out. With a population of 50 million, roughly one in thirty adults faced liquidation. Among those liquidated, 62% were young people aged 20 to 30.
On anonymous Korean workplace forums, someone wrote: "I made 600 million won initially, now I've lost a total of 700 million." Another said: "The money for my wedding was in there, down 40%." A 45-year-old office worker, Mr. Kim, after five rounds of adding funds, invested a total of 34 million won and was floating a loss of over half. Song Mi-kyung, 60, made 300 million won in the first half of the year and now has floating losses exceeding 60%. She said, "I have never seen such a rapid decline; even the speed of the Asian financial crisis wasn't this fast."
"My life is ruined; I can't think of any way out," one retail investor left this comment on a Korean brokerage forum.
