South Korea investing $7 billion in AI to stay ahead of the curve

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As countries brace themselves for a greater artificial intelligence (AI) adoption, South Korea is positioning itself as an industry leader with a major investment in the ecosystem.

On April 9, South Korean President Yoon Suk Yeol revealed the country’s intention to splurge 9.4 trillion won (US$6.9 billion) to support the local AI industry.

About 1.4 trillion won (US$1 billion) will be used to support AI semiconductor manufacturing firms to match industry first-movers like the U.S. and China, which have taken major steps to improve their chip-making capabilities amid rising AI adoption.

In response to the global power plays, Yoon announced a heavy investment in the space focused on AI chips rather than software and large language models (LLMs).

“It is no exaggeration to say that the future of the semiconductor industry depends on AI,” Yoon said. “The semiconductor competition taking place now is an industrial war and an all-out war between nations.”

South Korean administrators say the investment to jolt the local AI semiconductor industry will occur in tranches, coming to a close by the end of 2027.

The East Asian country will not start entirely from scratch, with semiconductors forming an integral part of its gross domestic product (GDP). In March, chip exports reached their peak at a staggering $11.7 billion.

“Just as we have dominated the world with memory chips for the past 30 years, we will write a new semiconductor myth with AI chips in the next 30 years,” said Yoon.

South Korea has set its sights on improving its digital economy, rolling out strict regulations for virtual asset service providers (VASPs) and ramping up investments in the metaverse.

Private firms mirror government enthusiasm

In June, South Korean telecom giant KT Corporation (NASDAQ: KT) announced a $5.3 billion investment in AI research and development to identify new use cases for the industry.

“We will do our best to raise the level of competitiveness of the AI industry in Korea as a whole, as well as KT’s future growth,” remarked KT Corporation Vice President Song Jae-ho at the time.

Other key industry players like Samsung Electronics, SK Hynix, and SK Square have signaled an intention to significantly increase their AI chip manufacturing capabilities in the coming months.

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