South Korea's President Unveils $7B Investment In AI To Preserve Semiconductor Dominance

South Korean President Yoon Suk Yeol announced a $7 billion investment in artificial intelligence (AI) by 2027 to maintain its global dominance in semiconductor chips.

What Happened: The investment includes a 1.4 trillion won fund to support AI semiconductor firms. This is part of South Korea’s strategy to keep up with the United States, China, and Japan, who are also investing heavily in their semiconductor supply chains, reported CNN.

Semiconductors are vital to South Korea’s export-driven economy. In March, chip exports reached a 21-month high, nearly a fifth of the country’s total exports.

In a meeting with policymakers and chip industry executives, President Yoon described the current competition in semiconductors as an “industrial war and an all-out war between nations.”

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With these investments, South Korea aims to significantly enhance research and development in AI chips, such as artificial neural processing units (NPUs) and next-generation high-bandwidth memory chips, according to a government statement.

The South Korean government also plans to promote the development of next-generation artificial general intelligence (AGI) and safety technologies that surpass existing models.

President Yoon has set a goal for South Korea to be among the top three nations in AI technology, including chips, and to secure a 10% or more share of the global system semiconductor market by 2030.

Why It Matters: The recent earthquake in Taiwan highlighted the risks of having critical infrastructure concentrated in one place, causing disruption to supply chains. South Korea’s investment in AI and semiconductors is a strategic move to mitigate such risks and strengthen its position in the global market.

Moreover, the escalating U.S.-China tech war and the increasing demand for AI chips, as indicated by KeyBanc Capital Markets’ quarterly supply-chain findings, further underscore the importance of South Korea’s investment.

Additionally, Samsung Electronics is projected to witness a significant rise in its first-quarter operating profit, but its stock has underperformed due to HBM.

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