Seoul: Samsung Electronics, South Korea’s semiconductor giant, announced plans to expand its domestic chip production capacity by adding a new line at its Pyeongtaek facility, reflecting a strategic push to meet surging global demand for memory chips. The move comes amid growing international interest in artificial intelligence (AI) and data center technologies, which are driving unprecedented demand for high-performance semiconductors.
The South Korean conglomerate said the new production line is part of a broader 450 trillion won (approximately US$310.8 billion) investment plan over the next five years. This marks one of the largest domestic industrial investment initiatives in recent years. The new line, focused on advanced memory semiconductors for AI servers as well as traditional smartphone and PC chips, will be housed in the so-called P5 plant, with production slated to begin in 2028. The facility had been delayed previously due to a slump in global demand for consumer electronics chips and oversupply in certain markets.
Samsung has already started adjusting its pricing strategy in response to market dynamics. Recent reports indicate price hikes of up to 60% for some memory chips since September, illustrating the tightening supply and rising demand. Analysts view the expansion as a proactive step to maintain Samsung’s leadership in the memory chip sector, particularly as AI-driven applications increasingly strain existing semiconductor supply chains.
The announcement also follows domestic discussions about balancing overseas investments with homegrown industrial growth. Following a bilateral trade deal with the United States, South Korean firms, including Samsung, pledged significant investments in U.S. strategic sectors. President Lee Jae-Myung has urged companies to prioritize domestic investments to ensure local manufacturing and employment remain strong. Samsung’s new facility aligns with these directives, signaling the company’s commitment to South Korea’s industrial base.
Samsung’s decision is part of a wider trend among South Korean conglomerates. Hyundai Motor Group plans to invest 125.2 trillion won between 2026 and 2030 in domestic manufacturing, while leading shipbuilders and heavy industries such as Hanwha Ocean and HD Hyundai have unveiled parallel investment strategies. These moves collectively reinforce South Korea’s position as a hub for high-tech manufacturing and underscore the government’s focus on industrial resilience.
The expansion into memory semiconductors for AI servers’ positions Samsung to capitalize on the growing AI revolution, while simultaneously strengthening the country’s domestic production capacity. However, the long lead time before production begins set for 2028 highlights the inherent challenges in semiconductor manufacturing, including market volatility and the risk of future oversupply.
By bolstering domestic chip production, Samsung is strategically navigating the intersection of global demand, geopolitical trade agreements, and domestic industrial policy. This investment not only secures South Korea’s standing in the global semiconductor industry but also aligns with broader governmental goals of sustaining high-value manufacturing at home. The P5 plant represents a critical step in preparing the nation for the AI-driven technological era and maintaining a competitive edge in an increasingly complex global semiconductor market.