This afternoon, South Korea will bet the country's fortune for the next decade

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 presided over by President Lee Jae-myung on Monday, with details to be disclosed at a press conference held at the Blue House at 2 PM local time on 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 The Economic Daily has unveiled 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 up to 2,000 trillion Korean won (approximately $1.3 trillion). Over the next decade, the two companies will continue to ramp up investments in South Korea's domestic semiconductor industry. Specifically, Samsung and SK Hynix are expected to each build 4 to 5 semiconductor factories in Gwangju. Samsung also plans to construct a chip packaging plant in South Chungcheong Province, while SK Hynix will expand its NAND factory in North Chungcheong Province.

As of press time, neither the South Korean government nor the two companies have officially released the complete plan details, and final specifics may still be subject to adjustment. However, based on recent signals from the South Korean government and information disclosed by local media, the direction of "continuing to heavily invest in semiconductors over the next decade" is essentially beyond doubt.

The significance of this move extends far beyond the mere capacity expansion of the two memory giants, Samsung and SK Hynix. Taking a broader view, this is essentially an industrial strategy deployment led directly by the South Korean government, and a public bet on the AI era.

Over the past few years, the competition surrounding large model training and AI data center construction has intensified, and one of the key infrastructures supporting this competition 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 supply chain.

Now, by pushing Samsung and SK Hynix to launch a trillion-dollar investment plan spanning a decade, the government is essentially sending a clear signal to the market—South Korea believes that AI's demand for high-performance memory is not a short-lived boom cycle, but an industrial wave capable of lasting a decade or more. Therefore, it is willing to bet this judgment using a decade's worth of capital expenditure.

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

What exactly does $1.3 trillion mean?

South Korea's total GDP for the full year of 2025 is approximately $1.87 trillion, meaning this investment plan is nearly equal to 70% of the country's entire annual economic output. As for the primary investors in this plan, Samsung's current market cap is about $1.34 trillion, while SK Hynix's is about $1.2 trillion. This means these two pillar conglomerates of South Korea are effectively committing half of their total value to a decade-long expansion plan.

Why is South Korea daring to make such a massive bet on a highly cyclical industry like memory? This stems from the changes the memory industry has undergone over the past year.

For decades, memory has been one of the most cyclical segments within the semiconductor industry. The industry has almost consistently followed the same pattern—rising demand drives prices up, manufacturers aggressively expand production, new capacity leads to oversupply, prices plummet, and then the cycle begins again. For this reason, most semiconductor companies rarely plan capacity on 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 the real constraint on AI computing power is no longer 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 makes memory bandwidth one of the bottlenecks in 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.

In simple terms, the rapid development of AI has, for the first time, thrust memory from its previously 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 chip manufacturers, cloud computing giants, and hyperscale data center operators have turned memory giants like SK Hynix, Samsung, and Micron into the biggest beneficiaries of global AI capital expenditure. The meteoric rise in performance and forward guidance has constantly reshaped the market's valuation expectations for the memory industry.

Faced with frenzied market demand, the HBM order backlogs of the three major manufacturers are generally already booked for years to come. The entire industry is continuously raising capital expenditure, hoping to release more advanced capacity as quickly as possible to capture a larger market share.

For this reason, the increased expansion by Samsung and SK Hynix is not surprising in itself. However, what's different this time is that it's not just companies stepping into the spotlight, but also the South Korean government. Clearly, South Korea aims 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 ambitious, decade-long investment plan inevitably raises a question that has been on the minds of all memory investors: Does the memory industry still have cyclicality? Or, should memory still be valued as a cyclical stock?

For decades, the market has grown accustomed to the operating patterns of the memory industry: demand surges, prices rise, production expands frantically, oversupply occurs, prices crash, and then the next cycle begins... For this reason, memory companies have long struggled to command a growth stock valuation premium.

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. Furthermore, producing the same amount of storage capacity in HBM consumes significantly more wafer capacity than traditional DRAM. This means that even as the three major manufacturers continue to expand, it will take much longer for new supply to actually hit the market—which is why the market still widely believes that HBM supply-demand tension will persist for several more years.

On the other hand, this does not seem to prove that cyclicality has disappeared. If the new production capacity of the three major manufacturers comes online over the next few years, and AI demand growth begins to slow, then the supply-demand imbalance currently supporting the industry's high profitability and valuations may eventually revert to equilibrium.

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

The answer South Korea offers today is a willingness to bet a decade of capital expenditure on sustained AI-driven demand for memory. Whether this means the memory industry has finally broken free from cyclicality or is embarking on an unprecedented super-cycle, only time will tell.