SEOUL, South Korea: South Korea's two biggest chipmakers, Samsung Electronics and SK Hynix, will invest a combined 800 trillion won (US$518 billion) to build a massive semiconductor manufacturing hub in the country's southwest as they expand production to meet soaring global demand driven by artificial intelligence.

The investment plan, announced on June 29, was unveiled by President Lee Jae Myung alongside the chairmen of both companies. The project supports the government's push to spread industrial investment beyond the greater Seoul metropolitan area, which currently dominates South Korea's semiconductor industry.

Samsung and SK Hynix, which together produce about two-thirds of the world's memory chips, said each company will build two fabrication plants in the southwest, adding to their existing manufacturing complexes in Gyeonggi Province.

Samsung Chairman Lee Jae-yong said the company's new facilities will be built in the southwestern city of Gwangju, where several potential sites have been proposed, including the grounds of a military air base scheduled for relocation.

Neither company provided a timeline for completing the new fabrication plants.

SK Hynix Chairman Chey Tae-won described the project as a large-scale undertaking requiring "vast sites, along with sufficient power, water and skilled workers." He noted that it took the company nine years to establish its major manufacturing cluster in Gyeonggi Province but said that further expansion is necessary to keep pace with growing global demand.

Government officials dismissed concerns about whether the southwest has adequate power and water supplies for the facilities. They said the region's renewable energy resources would give chipmakers an advantage as global customers increasingly demand cleaner electricity.

Samsung and SK Hynix have reported record profits in recent months as investment in AI data centers and related infrastructure has driven strong demand for memory chips. Officials and industry experts expect that demand to continue rising as AI expands into applications such as industrial robots and autonomous vehicles.

During the announcement, government officials outlined plans for a nationwide semiconductor ecosystem. Existing manufacturing hubs in the southeast will expand production of chip components and materials, the central Chungcheong region will specialize in semiconductor packaging, and new data centers will be developed across the country.

"We must establish the core building blocks of artificial intelligence faster than any other country. Semiconductors, physical AI and AI data centers are the three pillars of our next great leap forward," President Lee said.