South Korean chip giant Samsung Electronics announced plans on Sunday to invest a record 450 trillion won ($310.79 billion) at home amid worry that Seoul’s trade deal with Washington could weaken manufacturing at home.
As part of the funding, which will be spread over the next five years, Samsung will add a chip production line at its plant in the South Korean city of Pyeongtaek to meet rising demand amid the global boom in artificial intelligence.
“With the opening of the AI era, we expect global demand for memory chips will increase in the medium to long term, and plan to secure production lines in advance,” Samsung said, according to The Korea Herald.
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Samsung’s Korea-listed shares rallied more than 3.5% on Monday buoyed by the news of the investment.
Samsung’s planned investments come at a time when concerns are rising about the massive amounts of investments that have already been made in AI.
Warnings are increasing that the rush of money into the technology could be worsening an ‘AI bubble’ and that hype around the industry could potentially end up creating deep losses for companies developing the technology, by not creating sufficient value despite all their investments.
Tech leaders such as Microsoft chief Bill Gates and OpenAI chief Sam Altman have recently said that the recent deluge of investments point to a potential bubble, similar to what occurred in the lead-up to the dot-com crash in the early 2000s.
New chip production line
Meanwhile, American venture capitalist and Paypal co-founder Peter Thiel has sold his entire stake in US chipmaking giant Nvidia, according to his fund’s SEC filings this week.
The filings came after news last week that SoftBank chief Masayoshi Son had also sold his stake in Nvidia. The US chipmaker has become the poster-child for the AI frenzy, becoming the most valuable company in the world on the back of the tech’s growth. It hit a record $5 trillion valuation last month.
The new Samsung factory, which will make memory chips, will cater to demand for traditional and AI servers, a spokesperson said. Semiconductor prices are surging, as the global rush by chipmakers to produce AI chips tightens supply of those needed for smartphones, computers and servers.
Samsung Electronics this month raised prices of certain memory chips by as much as 60% compared to September, two people with knowledge of the hikes have told Reuters.
The new production line, or the P5 plant, part of the world’s biggest chip complex, had been delayed since late 2023, because demand slowed for chips for smartphones and PCs, and oversupply, according to public filings of its builder, Samsung C&T.
Mass production at the P5 plant will begin in 2028, the South Korean chipmaker said, adding that it also plans additional infrastructure investments to support expanded operations.
Worry about Korea losing out
Meanwhile, Samsung’s announcement also coincided with Korea’s trade deal with Washington, which includes a commitment from Seoul to invest $350 billion in US strategic sectors. The bilateral agreement was finalised on Friday.
But that has led to concerns that Korea could end up playing second-fiddle to the US in manufacturing. On Sunday, that led to South Korean President Lee Jae Myung holding a meeting with the country’s business leaders.
“There are concerns that domestic investment might shrink as US-bound investments strengthen,” Lee said at the meeting, as he asked companies to consider domestic investments more.
The president also asked companies to consult with the government to make good use of the $350 billion investment package for their overseas investments.
“Samsung will raise domestic investment, create quality jobs for young people and make even more efforts for a win-win with small and medium-sized, as well as venture companies,” Samsung Electronics chairman Jay Y Lee said at the meeting.
Korea’s Chosun Ilbo newspaper reported that Samsung’s investment was the largest-ever domestic investment in the history of the company.
Aside from Samsung, Hyundai Motor Group also announced domestic investments worth 125.2 trillion won from 2026 to 2030 at the meeting. Chosun reported that that was Hyundai’s biggest-ever Korean investment too.
Separately, Korean shipbuilders Hanwha Ocean and HD Hyundai also unveiled investment plans.
- Reuters, with additional editing and inputs from Vishakha Saxena
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