The president’s adviser says the need for AI could drive the next phase of textile manufacturing for more than a decade, and that the country needs a place to put it.
South Korea’s government is in talks with Samsung Electronics and SK Hynix about the next phase of major investment in chip production, a presidential adviser said Wednesday, adding that an announcement on a new batch of chips would follow.
These words, from the president’s policy adviser Kim Yong-beom, set the discussion as a discussion as the country’s transportation problem has not yet been resolved.
The pressure, Kim told the panel, comes from demand. The “dramatic and explosive” growth in orders driven by the AI industry would require the two companies to accelerate the construction of new buildings by more than 10 years, bringing capacity to the later planned 2034 or 2035. The schedule is rewritten based on how fast the chips are sold.
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That raises a question about which Kim has been tight-lipped. “If we look forward to the next stage in seven or eight years, we are faced with the challenge of finding a large new site for the second cluster,” he said.
The first cluster, a dense cluster of artificial plants south of Seoul, is the core of Korean memory production. A second of the same scale requires land, energy, and water on a scale that doesn’t add up quickly.
Beyond the timeline and site search, details remain sparse. Kim did not attach a win or dollar amount to the talks, and the talks were described as ongoing rather than concluded.
Korean outlets have reported that Samsung and SK Hynix are considering major investments in the southwestern region of the country, with figures that could reach hundreds of billions of won, although those reports go beyond what the presidency has confirmed and should be read as expectations rather than commitments.
The political background is President Lee Jae-myung’s emphasis on balanced regional development, which has made the location of investment in new industries a matter of national policy rather than corporate preference.
Directing a second chip cluster to an area outside the Seoul area tunnel will serve that purpose, which is part of why the government exists at all.
The numbers below the conversation describe its urgency. Korea is on track for double-digit growth for the first time in more than two decades, a pace driven almost entirely by the rising profits of its shipbuilders.
The boom is small, centered on two companies, and the same officials now debating where to build the next fabrics have spent recent weeks worrying about where the money is going.
Kim himself warned this month that the chip windfall risks converging on real estate rather than wages or productive investment, and floated a “normalization of property taxation” to answer.
The distribution question has already flared up once. Samsung’s biggest union came within days of an extended walkout this year ahead of a government-led wage deal, and the broader debate over who captures AI has become a matter of national policy, in Seoul’s wisdom.
The same chip surge that is driving fabric manufacturing is driving those arguments as well.
For companies, the appeal of building with the government on their side is straightforward.
The new fabric is among the most capital-intensive projects in the industry, and world government support, permits, and infrastructure are shortening the runway.
The demand for high-bandwidth memory that feeds AI accelerators has lifted both firms, SK Hynix is riding a heavy HBM cycle, and neither will want to be short of capacity when the next wave of orders arrives.
What was announced on Wednesday, finally, is that an announcement is coming. The position of the second group, its location, its cost, and how the bill is divided between companies and the government, are the things that have yet to be fixed.
Meanwhile, Seoul has confirmed that talks are taking place and the clock is ticking faster than planned.
