Original | Odaily Planet Daily (@OdailyChina)
Author | Azuma (@azuma_eth)
The office of the South Korean president announced on Sunday that Samsung Group and SK Group will unveil significant investment plans at a meeting hosted by President Lee Jae-myung on Monday, with details to be disclosed at a briefing at the Blue House at 2 PM Korean time (1 PM Beijing time) on Monday. Samsung Group Chairman Lee Jae-yong and SK Group Chairman Choi Tae-won will both attend the event.
The South Korean media outlet 'Economic Daily' disclosed more details about the plan today.
According to reports, as part of President Lee Jae-myung's flagship industrial strategy, Samsung Group and SK Group are expected to jointly announce an investment plan with a total scale of up to 200 trillion won (approximately 130 billion USD). Over the next decade, the two companies will continue to invest heavily in the local semiconductor industry, with Samsung and SK Hynix expected to build 4 to 5 semiconductor plants in Gwangju, while Samsung plans to construct a chip packaging facility in South Chungcheong Province, and SK Hynix will expand its NAND factory in North Chungcheong Province.
As of the time of writing, the South Korean government and the two companies have not formally released complete details of the plans, and final details may still adjust; however, signals released by the South Korean government recently and information disclosed by the Korean media indicate that "continuing to focus on semiconductors over the next decade" has become almost certain.
The significance of this matter goes far beyond the expansion of the two memory giants Samsung and Hynix; it is actually an industrial strategic deployment led directly by the South Korean government, as well as South Korea's public bet on the AI era.
In recent years, the race surrounding large model training and AI data center construction has continuously escalated, and one of the key infrastructures supporting this competition is high-performance storage. As a core power in the global storage industry, South Korea has always held the most irreplaceable link in the AI industry chain.
Today’s push for Samsung and SK Hynix to start a trillion-level investment plan spanning a decade essentially sends a clear signal to the market — South Korea believes that the demand for high-performance storage driven by AI is not just a brief economic cycle, but an industrial wave that could last a decade or even longer, and is thus willing to bet on this judgment with capital expenditure over the next decade.
Why is Korea willing to take such a big gamble?
What does 130 billion USD represent?
In the entire year of 2025, South Korea's gross domestic product (GDP) is projected to be approximately 1.87 trillion USD, meaning this investment plan's scale is close to nearly 70% of South Korea's entire economic output for a year. In addition, the investing entities in this plan, Samsung and SK Hynix, currently have market values of about 1.34 trillion USD and approximately 1.2 trillion USD, respectively, meaning these two pillar-level South Korean conglomerates will invest half of their wealth into the expansion plans for the next decade.
Why does South Korea dare to invest such a large gamble in the highly cyclical storage industry? This requires looking at the changes that have occurred in the storage industry over the past year.
For the past several decades, storage has consistently been one of the most cyclical sectors of the semiconductor industry. The industry has almost always followed the same pattern — demand growth drives price increases, manufacturers expand production significantly, new capacity releases lead to oversupply, and ultimately prices plummet — followed by a subsequent cycle. Because of this, most semiconductor companies rarely plan capacity over a decade or more.
All changes began with AI. As competition in AI has intensified, models have grown larger, and inference demand has continued to rise, the market has gradually realized that the true limitation to AI computing power is no longer just the GPU, but also high-bandwidth memory (HBM). The GPU determines the upper limit of computing power, while HBM determines whether the GPU can truly perform, which means that memory bandwidth has begun to become one of the bottlenecks in AI computing power expansion. The larger the models, the more parameters, and the more frequent the inferences, the greater the demand for high-bandwidth, high-capacity storage.
In simple terms, the rapid development of AI has brought storage into the spotlight of the entire industry chain for the first time, moving it away from its previous relatively low-profile supporting role.
This change quickly reflected in the industry and capital markets. Enormous orders from global AI chip manufacturers, cloud computing giants, and large-scale data center operators have made SK Hynix, Samsung, Micron, and other storage giants the largest consumers of global AI capital expenditures. Their performance and forward guidance have rapidly risen, continuously refreshing the market's valuation expectations for the storage industry.
Faced with insane market demand, HBM orders from the three major manufacturers are generally scheduled for several years into the future, and the entire industry is continuously raising capital expenditures in hopes of releasing more advanced capacity quickly to capture a larger market share.
For this reason, Samsung and SK Hynix’s increase in capacity is not surprising in itself, but what sets this time apart is that it is not just the companies stepping up to the stage; clearly, South Korea hopes to solidify not just the market shares of Samsung and SK Hynix, but also South Korea's strategic position in the global AI infrastructure.
Can the Koreans win?
Of course, this grand investment plan spanning a decade will inevitably raise a question that all storage investors are continuously watching — Does the storage industry still have cyclicality? Or should storage continue to be valued as a cyclical stock?
For decades, the market has already become accustomed to the operational patterns of the storage industry: explosive demand, rising prices, frantic capacity expansion, oversupply, plummeting prices, and then entering the next cycle… Because of this, storage companies have long found it difficult to receive valuation premiums typically associated with growth stocks.
However, the emergence of AI has challenged this logic for the first time. The demand for high-performance storage from AI far exceeds any previous technological iterations, and the capacity needed for HBM increases at a higher rate than traditional DRAM. This means that even as the three major manufacturers continue to expand production, the release of new supply will genuinely take longer — this also explains why, even today, the market generally believes that the supply-demand tightness for HBM will persist for several more years.
On the other hand, it seems this cannot prove the end of cycles. If the new capacities of the three major manufacturers are gradually put into operation in the coming years, and AI demand growth starts to slow down, then the current supply-demand imbalance supporting high profitability and high valuations in the industry may eventually return to equilibrium.
In other words, AI might change the length of the cycle, but it might not change the cycle itself.
South Korea's answer today is to be willing to bet on the sustained growth of AI's demand for storage using capital expenditures over the next decade. As for whether this signifies the storage industry bidding farewell to cycles or entering an unprecedented super cycle, only time will tell.
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