Samsung and SK Hynix plan $590bn chipmaking expansion in South Korea

In short: Samsung Electronics, SK Hynix, and the South Korean government say they will invest about $590bn to expand chip manufacturing over the next 15 years.

What happened

Samsung and SK Hynix, the world’s biggest makers of memory chips, announced a large expansion plan with the South Korean government. Memory chips are the parts that store and move data inside computers, like a desk and filing cabinet for a machine.

The combined investment is Won911tn, which is about $590bn. The plan is to build new chipmaking facilities in less developed parts of South Korea, as part of a government push to spread economic growth beyond the main industrial hubs.

Most of the money, about Won800tn, is set aside for four new chipmaking plants in the country’s south-west. Another Won81tn is planned for a “chip packaging” cluster in the central region. Chip packaging is the step where finished chips are put into protective casings and connected so they can be used in devices, similar to boxing and labeling a product before shipping.

The government also said it plans to invest Won30tn over 15 years to develop next-generation memory chips, “on-device AI” chips (AI that runs directly on your phone or laptop, not on a remote server), and chips used in defence.

Why it matters

Demand for memory chips is rising because more data centers are being built to run chatbots and other AI tools. When big buyers take more supply, prices can rise for everyone else. The Financial Times notes Apple recently raised some MacBook and iPad prices, citing the high cost of memory and storage.

Source: Financial Times