South Korea goes all in on AI with $880B investment plan
The Prime Minister, memory chip leaders and a televised audience walk into a room…
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You can’t escape South Korea’s AI creds these days. Whether it is record earnings from Samsung, SK Hynix becoming a trillion-dollar business or the rise (and volatile crashes) of the KOSPI, the benchmark for the South Korea Exchange which is now world famous. Yesterday, the country’s Prime Minister announced a massive investment plan live on TV. Let’s dive in.
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AI isn’t just for techies in Korea, it’s a televised national event
South Korea is making AI the centrepiece of its next economic growth strategy after a splashy televised event saw President Lee Jae-myung announce an $880 billion plan to massively grow its already lucrative semiconductor and AI capabilities.
Korean companies are already reaping the benefits of demand for components, with memory makers Samsung and SK Hynix posting record financial results and huge stock price gains. These are two of the main backers of “Three Mega Projects,” the Korean initiative to develop new chip production hubs, data centres and robotics technology by 2035.
The two memory giants are leading the charge, with GS Group, an energy firm spun out of LG in 2005, and Naver among the others joining, per Bloomberg:
Samsung Group and SK Group said they each plan to build two chipmaking plants in the southwest, with total investment of 800 trillion won [$516 billion], to rapidly expand production capacity and meet rising demand. South Korea also announced 550 trillion won [$355 billion] of investment from companies including internet leader Naver Corp. to build 8.4 gigawatts of AI data-centre capacity by 2029.
There’s a lack of memory chips, which Samsung and SK Hynix supply, due to a surge in demand from companies building AI products and infrastructure. That’s led to a global shortage that’s pushed up the price of consumer electronics (Apple just hiked its prices) and, in response, Korea aims to double its output over the next five years.
The deals were announced in a live event on national TV with President Lee alongside the heads of Samsung and SK Hynix, who were called national heroes. That’s the level of mainstream focus on AI in Korea, where the AI craze has sent stock prices ripping with SK Hynix becoming a trillion-dollar business and Korea’s KOSPI market hitting record highs despite volatility.
“We’re entering an era where the page turns in the blink of an eye,” The president said. “Speed is the only way to survive.”
President Lee’s plan also focuses on greater distribution of wealth from this boom. One core goal is also to create jobs outside of Seoul to ensure that the benefits are felt across the country and not only in the capital.
This is not the first time Korea’s government has pledged to power up its chip sector, as Bloomberg noted:
In 2021, Moon Jae-in’s administration unveiled a similar private sector-led investment blueprint anchored by Samsung and Hynix to spend $450 billion over a decade on semiconductor research and production. More broadly, Seoul in 2023 engineered a $400 billion plan for spending on a far broader range of sectors including EVs and biotechnology.
When recapping Asia’s efforts to develop sovereign AI, we noted that Korea has engaged major companies to develop local AI products with the backing of solid local infrastructure. Now that could go to another level if these pledges yield real results, new data centres, more chips, etc.
Certainly, the event caught the attention of more than the Korean nation, with interest and headlines generated across the world. Many want their government to take similar action, but Korea is in an enviable and unique position with the corporations and tech expertise it has developed.
CXMT lands multi-billion Tencent deal ahead of blockbuster IPO
CXMT (ChangXin Memory Technologies), China’s largest memory chip maker, is said to have landed a major deal with Tencent worth more than 20 billion yuan ($2.94 billion) as it prepares for a blockbuster IPO.
We wrote at the beginning of June that CXMT was readying for a China listing to raise more than $4 billion, and landing Tencent’s business is a massive validation that will add fuel to its IPO fire.
Reuters broke the news and it said that the agreement covers “several years” of DRAM chip supply for Tencent servers, although it isn’t clear whether that will be three or five years, based on the sources the news outlet spoke to.
Memory is one of the most constrained but essential pieces of the computing, data centre and AI play, as Korea’s massive new strategy clearly shows. CXMT sits behind SK Hynix, Samsung and US-based Micron in the global pecking order of memory providers, but its growth is likely to come from supporting China’s ecosystem growth and working with the likes of Tencent to develop self-sufficient AI and computing.
But there’s potential to go global. Networking companies Huawei and ZTE expanded their business reach into international markets by offering competitive products at lower cost than Western equivalents. Things got tricky with politics, but there will likely be scope for CXMT and others to do the same in the future.
Deals
China’s robotics sector continues to grow after AI2 Robotics and Alibaba-backed X Square Robot each reached valuations of about $2.9 billion in recent funding rounds [Bloomberg]
Indian AI startup Rocket is reportedly in talks to raise $40-50 million led by wealth management firm 360 One Asset at a roughly $500 million valuation, that’s less than a year after closing a $15 million round at a $60 million valuation [Economic Times]
Markets
We wrote recently about AirTrunk, the data centre provider that includes Blackstone among its backers, and its plans for a Singapore REIT listing and now it is reportedly close to filing with plans to raise about $1.5 billion, which would make it the city-state’s largest listing since 2017 [Bloomberg]
One listing that is going ahead is Chinese autonomous-driving firm Momenta Global, which is aiming to raise up to HK$5.89 billion ($751.1 million) after filing for a Hong Kong IPO [Reuters]
AI and Chips
DeepSeek announced a major V3 model upgrade that it claims boosts per-user response speeds by up to 85% using a speculative decoding framework called DSpark [South China Morning Post]
ByteDance will reportedly deploy its first in-house CPUs for its AI infrastructure in the second half of next year, with the design set to be finalised in partnership with Qualcomm in early 2027 [South China Morning Post]
In other news:
Vietnam sharply increased fines for spreading fabricated information online, part of a wider effort to curb cyber fraud and misinformation [SGGP]
Apple accused Indian antitrust investigators of copying rivals’ complaints verbatim rather than conducting an independent probe, and asked for the findings to be quashed [Reuters]
China’s DJI and Insta360 now account for nearly 90% of global smart-camera shipments as demand for portable imaging devices grows, according to IDC [South China Morning Post]
Japanese startups are building prediction-market apps that pay out in points redeemable for gift cards rather than cash, in order to sidestep strict anti-gambling laws [Bloomberg]
The US FCC will expand import restrictions on Chinese technology next month to cover legacy equipment from manufacturers including Huawei, ZTE, Hytera, Hikvision and Dahua [South China Morning Post]