Samsung, SK Group unveil blueprint for Honam's first 'mega fab' with 800 trillion won investment

A major new production hub aimed at easing the global memory shortage — one of the biggest bottlenecks facing the AI industry — is set to be unveiled in Gwangju on Monday.

Samsung Electronics and SK hynix, the world's two largest memory chipmakers, will release detailed investment plans for their first-ever front-end semiconductor fabrication facilities in the Honam region. The announcement comes one day before the launch of the integrated South Jeolla Province-Gwangju Special City on Tuesday.

The investment marks a historic turning point for South Korea's semiconductor industry, as the AI chip production belt — long concentrated in Gyeonggi Province and the Chungcheong region — extends southward for the first time.

The move aligns with President Lee Jae Myung's policy of balanced regional development while expanding production of memory chips — the "brains" powering AI data centers and physical AI industries — positioning South Korea to seize the initiative in the global AI race.

Samsung Electronics and SK hynix will each invest 400 trillion won ($259 billion), for a combined total of 800 trillion won, to build the Honam region's first memory semiconductor factories, as announced at the Three Major Mega-Projects National Report held at Cheong Wa Dae on Sunday. The core plan calls for each company to build two fabrication facilities, for a total of four.

Further details on factory sites and plans for power and water supply are expected at a public briefing the Ministry of Trade, Industry and Energy will hold at the Kim Dae-jung Convention Center in Gwangju on Monday.

Three candidate sites have been named for the new facilities: the Gwangju military airport site, the Advanced District 3 site in Oryong-dong, Buk-gu, Gwangju, and Solaseado, adjacent to Haenam and Yeongam.

The industry has long regarded the existing greater Seoul-centered cluster as highly efficient, given the deep semiconductor ecosystem built up there over decades. But the two companies are making an unusual strategic bet by dispersing new production facilities to the Honam region, effectively launching a second semiconductor cluster.

With land and power increasingly difficult to secure in the already saturated greater Seoul area, the Honam region is positioning its access to renewable energy — drawn from solar and offshore wind farms — as its strongest competitive advantage.

Proponents argue the region is well suited to meeting the global RE100 requirement, which mandates that 100 percent of electricity used in manufacturing come from renewable sources such as solar and wind.

Securing suitable land and building basic power and water infrastructure for semiconductor facilities takes considerable time. SK hynix, which announced its Yongin semiconductor cluster plan in 2019, will not bring its first factory online until February 2027 — an eight-year process.

The industry expects the timeline to be shorter this time, given the government's strong commitment to active support.

Minister of Climate, Environment and Energy Kim Sung-hwan said the government would "supply without disruption the 6.3 gigawatts of power and 650,000 metric tons of water the southwestern semiconductor factories will need — and prepare even more water and electricity in advance." He added that "electricity produced in Honam will now be used to power Honam's semiconductor fabs."

Concern over a looming memory supply crisis also underlies the two companies' push to build a semiconductor cluster in the Honam region.

Samsung Electronics is already preparing to invest 360 trillion won in a large-scale semiconductor cluster at the Yongin National Industrial Complex in Gyeonggi Province, with plans to build six fabrication facilities by 2040. SK hynix has similarly committed 600 trillion won to the Yongin cluster, planning to build four fabs by 2033.

Yet both companies have concluded that even this will not be enough. As global technology giants race to build massive AI data centers, demand for the AI chips that power them has grown at an explosive pace.

With orders for high-performance memory chips needed for large-scale AI model training and inference piling up, Samsung Electronics and SK hynix believe they risk missing a critical window if they cannot respond to demand in time.

Lee Jong-wook, a team leader at Samsung Securities, said a prolonged large-scale shortage "could stimulate research into alternative technologies and cause memory to lose its potential market — and a shortage could even suppress demand itself."

While Samsung Electronics and SK hynix plan front-end fabs in the Honam region, both companies will also invest in the Chungcheong region to strengthen advanced packaging capabilities — an area that has become a key battleground in the industry.

Samsung Electronics, which already operates back-end packaging facilities in Cheonan and Onyang, Asan, plans to invest 56 trillion won there to build a cutting-edge HBM fabrication facility. SK hynix will invest 100 trillion won in Cheongju to construct a new NAND flash production line and bolster its advanced packaging capabilities for HBM back-end processing.

SK Group will also invest 1,000 trillion won across major sites nationwide to build AI data centers that serve as the nervous system of the AI industry. Led by SK Telecom and in partnership with GS, Naver and others, the group plans to build ultra-large data centers totaling 8.4 gigawatts of capacity — SK Telecom contributing 5 gigawatts, GS 2.4 gigawatts and Naver 1 gigawatt — by the first half of 2028.

SK Group also laid out a strategy to expand total capacity to 15 gigawatts and ultimately build a mega-infrastructure AI data center network of 18.4 gigawatts by 2035.

While agentic AI currently drives industry trends, physical AI — represented by self-driving cars and humanoid robots — is widely seen as the next major frontier. The industry expects demand for memory chips and AI data centers to surge as the physical AI era arrives.

In response, Samsung Electronics plans to establish a mass-production line for physical AI and humanoid robots in Gumi, North Gyeongsang Province, while Samsung SDS will build AI data centers.