South Korea bets big on AI chips and defense boom

The country is capturing a rare convergence of AI infrastructure demand and geopolitical defense spending just as domestic policy support lags peers. Samsung pledged $228 billion for new semiconductor facilities while the government allocated $786 million for AI chip R&D over five years. South Korea's memory chip leaders dominate global DRAM with Samsung holding 40.7 percent market share and SK Hynix at 28.8 percent, positioning them as critical suppliers for AI data centers. Defense and shipbuilding orders are surging from rearmament and supply-chain realignment away from China. The challenge is policy coordination: analysts argue South Korea is under-supporting the sector versus US, Chinese, Japanese and Taiwanese programs, with semiconductor tax credits and AI legislation stalled. Corporate strength is outrunning state strategy at precisely the wrong moment.