Samsung and SK hynix announce billion-dollar investments – stock market reacts with sell-offs

Stock market reacts with sell-offs

Samsung faces an additional burden: According to a report by the news agency Yonhap, the group is planning a share buyback of around 90 trillion won, although this has not yet been confirmed by the board. Such buybacks are generally a signal to the market but are intended to directly benefit shareholders.

In terms of content, the initiative focuses on three areas. President Lee Jae Myung spoke of semiconductors, physical AI, and AI data centers as a "triple axis for our great leap forward." "We must secure the core elements of artificial intelligence faster than any other country," the President said according to the available reports. He also announced: "We are starting a new chapter in the history of Korea."

Three areas in focus: semiconductors, physical AI, and AI data centers

A core element is the construction of new chip clusters in the southwest of the country. The city of Gwangju and the province of South Jeolla alone want to invest 520 trillion won, equivalent to around 297 billion euros, for this purpose. Overall, a new semiconductor ecosystem is to be created there with corporate investments of around 450 billion euros.

The circulating estimates range from 900 trillion won for the southwest cluster alone to 2,000 trillion won for all of the groups' plans. According to media reports, total investments in the coming years could exceed a quadrillion won, equivalent to around 569 billion euros. Whether the announced trillion-dollar sum will become a binding commitment or a declaration of intent initially remained open.

Financing remains unclear

Presidential advisor Kim Yong-beom called the expected figures "very unusual" in advance. The Korea JoongAng Daily puts the cost of a single facility at at least 60 trillion won, around 40 billion US dollars. The focus is shifting from chip back-end manufacturing to the most capital-intensive stage, wafer production.

The investments take place against the backdrop of a global boom in applications related to NVIDIA and AI data centers. Observers therefore also see the plans as an attempt by South Korea to position itself more strongly in the supply chain for high-performance chips and to benefit from growing demand in the long term.

Outlook: further details expected

It remains unclear, however, how the enormous cash outflows will affect the groups' cash flow, dividends, and debt levels. The role of state support and possible tax relief was also not detailed at the briefing, but is likely to be the subject of further announcements in the coming weeks.

Overall, a picture of cautious expectation is emerging in the markets. While the government classifies the step as a historic turning point, investors initially see primarily the short-term burdens and are asking about the viability and returns of the projects.

The presidential briefing on 29 June 2026 marks only the kick-off of a longer process. Further details on the specific use of funds, the timeline for the clusters, and accompanying government measures are expected in the coming weeks and months.