Today afternoon, South Korea is set to bet its national fortune for the next decade

Original: Odaily Planet Daily (@OdailyChina)

Author: Azuma (@azuma_eth)

The South Korean presidential office stated on Sunday that Samsung Group and SK Group will announce major investment plans on Monday at a meeting presided over by President Lee Jae-myung. Details will be disclosed at a press briefing held at the Blue House at 2 PM local time Monday (1 PM Beijing time). Samsung Electronics Chairman Lee Jae-yong and SK Group Chairman Chey Tae-won will both attend the event.

South Korean media outlet Economic Daily disclosed further details of the plan today.

According to reports, as part of President Lee Jae-myung's flagship industrial strategy, Samsung Group and SK Group are expected to jointly announce an investment plan totaling a massive 2,000 trillion won (approximately $1.3 trillion). Over the next decade, the two companies will continue to ramp up investment in South Korea's domestic semiconductor industry. Specifically, Samsung and SK Hynix are expected to build four to five semiconductor fabs each in Gwangju. Samsung also plans to construct a chip packaging plant in South Chungcheong Province, while SK Hynix will expand its NAND flash manufacturing facility in North Chungcheong Province.

As of press time, neither the South Korean government nor the two companies have officially released complete plan details, and final specifics may still be subject to adjustments. However, based on signals from the South Korean government in recent times and information from local media, the direction of "heavily investing in semiconductors over the next decade" is virtually without question.

The significance of this move extends far beyond the two memory giants simply expanding production capacity. Taking a broader perspective, this is essentially an industrial strategic deployment led by the South Korean government itself, and a public bet placed by the country on the AI era.

In recent years, the competition surrounding large model training and AI data center construction has intensified. A key piece of infrastructure underpinning this competition is high-performance memory. As a core force in the global memory industry, South Korea has consistently held an irreplaceable position in the AI supply chain.

Now, by pushing Samsung and SK Hynix to launch a trillion-level investment plan spanning a decade, the government is fundamentally sending a clear signal to the market: South Korea believes that AI's demand for high-performance memory is not merely a short-lived cyclical boom, but an industrial wave capable of lasting ten years or more. Therefore, it is willing to bet its capital expenditure for the next decade on this judgment.

Why is South Korea Daring to Make Such a Big Bet?

What benchmark is $1.3 trillion?

South Korea's total Gross Domestic Product (GDP) in 2025 was approximately $1.87 trillion. This means the scale of the investment plan is close to 70% of the country's entire annual economic output. As for the main investing entities in this plan, Samsung Group has a current market cap of about $1.34 trillion, while SK Hynix's market cap is around $1.2 trillion. This implies these two major South Korean conglomerates will dedicate roughly half of their total value to the expansion plans for the next decade.

Why is South Korea willing to bet so heavily on such a notoriously cyclical industry? This brings us to the changes the memory industry has undergone over the past year.

For decades, memory has been one of the most cyclical sectors within the semiconductor industry. The industry has almost always followed the same pattern: rising demand drives prices up, manufacturers aggressively expand capacity, the release of new capacity leads to oversupply, prices crash, and then the cycle begins again. For this reason, most semiconductor companies rarely plan production capacity with a ten-year horizon.

Everything changed with the advent of AI. As the AI competition escalates, models grow larger, and inference demand continues to rise. The market has gradually realized that what truly limits the further improvement of AI computing power is not just the GPU, but also High Bandwidth Memory (HBM). The GPU determines the ceiling of computing power, but HBM determines whether the GPU can actually perform effectively, making memory bandwidth a bottleneck for AI computing expansion. The larger the model, the more parameters it has, and the more frequent the inference, the higher the demand for high-bandwidth, high-capacity memory.

Simply put, the rapid development of AI has thrust memory, once a relatively low-key supporting role, into the spotlight of the entire industry chain.

This change quickly reflected in the industry and capital markets. Massive orders from global AI chipmakers, cloud computing giants, and hyperscale data center operators have made memory giants like SK Hynix, Samsung, and Micron the biggest absorbers of global AI capital expenditure. The rapid ascent of their earnings performance and forward guidance has continuously reshaped the market's valuation expectations for the memory industry.

Faced with this frenzied market demand, the HBM order backlogs of the three major fab players have generally extended for several years. The entire industry is continuously raising capital expenditure, hoping to release more advanced capacity as soon as possible to capture a larger market share.

Therefore, Samsung and SK Hynix increasing their production capacity isn't entirely surprising in itself. However, the novel aspect this time is that it's not just the companies stepping onto the stage, but also the South Korean government. Clearly, South Korea seeks to solidify not just the market share of Samsung and SK Hynix, but also its own strategic position within the global AI infrastructure.

Can South Korea Win?

Of course, this decade-long, grand investment plan will inevitably raise a question on the minds of all memory investors: Is the memory industry still cyclical? Or, should memory continue to be valued as a cyclical stock?

For decades, the market has grown accustomed to the operational rhythm of the memory industry: demand surges, prices rise, frenzied expansion, oversupply, prices crash, and then the cycle begins anew. This is precisely why memory companies have historically struggled to command valuation premiums typical of growth stocks.

However, the emergence of AI has challenged this logic for the first time. AI's demand for high-performance memory far exceeds any previous technological iteration, and producing an equivalent capacity of HBM consumes far more wafer capacity than traditional DRAM. This means that even as the three major fabs continue to expand, bringing new supply online will take considerably longer. This is why the market still widely believes HBM supply-demand tension will persist for several more years.

On the other hand, this doesn't necessarily prove the cycle has disappeared. If the new capacity from the three major fabs comes online in the coming years, and the growth rate of AI demand begins to slow, the current supply-demand imbalance that supports high profitability and high valuations in the industry may eventually revert to equilibrium.

In other words, AI might change the length of the cycle, but it may not change the underlying nature of the cycle itself.

The answer South Korea is offering today is a willingness to bet its capital expenditure for the next decade on the sustained growth of AI's demand for memory. As for whether this means the memory industry bids farewell to cycles forever, or is about to enter an unprecedented super-cycle, only time will tell.