Korea's AI super investment plan pushes memory capacity expansion into the trillion-won era

Overview

This report comments on the long-term large-scale investment plans of the Korean government and major corporations around AI, memory, and AI data centers. Korea's MOTIR proposed semiconductors, AI robots and Physical AI, and AI data centers as three major growth pillars, while Samsung Group and SK Group each announced ultra-long-term capital expenditure plans. J.P. Morgan interprets this as a strategic signal from Korea's memory industry, amid strong growth in AI computing demand, tight supply, and intensifying global competition, to maintain leadership and meet customer demand.

Core views

The core view is that the W4,755T or about US$3.1T investment scale marks the Korean memory industry entering an ultra-long-term capacity expansion cycle, although actual capacity deployment will still be constrained by the memory industry's supply-demand cycle. The report believes supply shortages and competition are the two main themes of this plan: on one hand, memory demand driven by AI and server computing remains strong, with supply availability described by industry executives as only about half of demand; on the other hand, Korean memory companies need faster capacity expansion and back-end packaging investment to maintain market leadership. J.P. Morgan believes the plan is beneficial in the medium to long term for SPE, power infrastructure, and semiconductor EPC suppliers, and prefers SK Inc and Samsung C&T; however, in the short term the market remains cautious about rising memory prices, uneven profit allocation to customers, potential price-manipulation litigation, and the cyclical timing of accelerated capital expenditure.

Analysis framework

The report adopts a combination of industry event commentary and supply-demand cycle analysis: it first reviews the investment scale, regional layout, and timelines disclosed by the Korean government, Samsung Group, and SK Group, then uses memory capacity, WSPM wafer start scale, capital intensity, and AI compute demand to assess potential revenue opportunities and beneficiary directions along the value chain, while also evaluating the sustainability and legal risks of memory pricing in light of the Apple-MU pricing dispute and U.S. class-action litigation.

Methodology notes

• Industry supply-demand cycleMemory S/D and capital expenditure cycle

  The pace of capacity expansion needs to match industry supply and demand

  The report believes that long-term investment plans themselves do not equate to immediate capacity release, and that the actual construction pace will be affected by the memory industry's supply-demand cycle; accelerated capital expenditure can be viewed positively in the early to mid cycle, but in the mid-to-late stage or at the peak of the cycle it may be interpreted negatively by the market.

• Value chain mappingAI infrastructure beneficiary chain

  Mapping memory capacity expansion to SPE, power infrastructure, and semiconductor EPC

  The report links AI computing demand, memory fab construction, back-end packaging, data center power demand, and engineering construction, concluding that long-term capital expenditure is a medium- to long-term positive for SPE suppliers, power infrastructure suppliers, and semiconductor EPC operators.

• Return scenarioRevenue opportunity implied by capital intensity

  Estimating the potential revenue pool using 15%-25% capital intensity

  Using the US$3T investment amount and a 15%-25% capital intensity assumption, J.P. Morgan estimates that the long-term investment could ultimately correspond to about US$12-20trn of cumulative revenue opportunity, significantly higher than the roughly US$1.2trn of cumulative revenue generated by Korean memory makers over the past 20 years.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• SK Inc (034730.KS)

  A preferred Korean beneficiary of AI infrastructure and semiconductor capital expenditure in the report, rated OW

  Strengths

  SK Group plans W2,100T of investment, with W1,100T allocated to memory and W1,000T to AI infrastructure; the narrative of AI data centers shifting from storage to token generation reinforces long-term growth potential.

  Weaknesses

  Actual benefits depend on execution of group-level projects, the pace of capital expenditure, and the position of the memory cycle; short-term market reaction to Korean memory stocks has been relatively negative.

  Comparison

  Compared with pure memory manufacturers, SK Inc offers broader exposure to group AI infrastructure and the semiconductor value chain.

  Risks

  Memory price disputes, reversal of the supply-demand cycle, overly rapid capacity expansion, delays in AI data center construction, and spillover from legal litigation.

• Samsung C&T (028260.KS)

  A preferred beneficiary of semiconductor EPC and infrastructure in the report, rated OW

  Strengths

  Construction of Korean memory fabs, AI data centers, power, and green energy projects is expected to generate demand for semiconductor EPC and infrastructure.

  Weaknesses

  The benefit path is relatively indirect and depends on the execution of Samsung Group's long-term projects and the release of engineering orders.

  Comparison

  Compared with memory manufacturers, Samsung C&T is more exposed to the engineering, construction, and infrastructure execution link, and may benefit from capital expenditure expansion but has lower sensitivity to memory prices.

  Risks

  Project timing delays, capital expenditure cuts, pressure on engineering margins, and adjustments to the group's investment pace.

• Samsung Electronics

  One of the main Korean memory and semiconductor investment entities

  Strengths

  Plans to invest W2,450T during 2026-2040, of which about W2,100T will go to semiconductors; covering key links such as the Yongin fab cluster, existing fabs, and HBM back-end packaging.

  Weaknesses

  The huge capital expenditure cycle is very long, and actual capacity deployment and investment returns are affected by memory supply-demand and pricing cycles.

  Comparison

  Like SK Group, Samsung Electronics is one of the core execution entities for maintaining Korea's leadership in memory.

  Risks

  Customer resistance triggered by price increases, regulatory and litigation risks; if capacity expansion accelerates near the cycle peak, future supply pressure may depress returns.

• Semiconductor equipment suppliers (SPE)

  A direct beneficiary segment in the value chain from Korea's memory capacity expansion

  Strengths

  J.P. Morgan estimates that 60%-70% of the US$3.1T plan will be spent on front-end wafer equipment, implying substantial long-term order potential.

  Weaknesses

  Equipment order confirmation usually depends on specific phased fab timelines, and further disclosures during upcoming earnings seasons and corporate events are still needed.

  Comparison

  Compared with consumer electronics brands, SPE benefits more directly from memory supply-side expansion.

  Risks

  Project delays, slower equipment procurement pace, and memory cycle downturns causing customers to cut capital expenditure.

• Power infrastructure and AI data center suppliers

  Beneficiary segments of AI infrastructure and data center construction

  Strengths

  SK Group plans to build 15GW of AI infrastructure by 2035, and the Korean government has also proposed W550T of AI data center investment, driving demand for power, green energy, and facility construction.

  Weaknesses

  Power access, land, approvals, and construction cycles may constrain the speed of implementation.

  Comparison

  Compared with exposure to memory prices alone, power infrastructure benefits from AI data center capacity expansion and long-term energy demand.

  Risks

  Delays in data center projects, power supply bottlenecks, policy changes, and rising capital costs.

• Consumer electronics brands and memory purchasers

  The pressured side from rising memory prices

  Strengths

  Strong AI and server demand can support configuration upgrades in high-end products, but purchasers need to secure supply of critical memory.

  Weaknesses

  The Apple-MU dispute shows rising customer dissatisfaction with rapid short-term memory price increases and supplier-favored profit allocation.

  Comparison

  Unlike memory manufacturers, which benefit from rising prices, consumer electronics brands face higher BOM costs and greater procurement difficulty.

  Risks

  Insufficient memory supply, difficulty passing through costs, pressure on gross margins, and deterioration in negotiation relationships with suppliers.

Key data

• Total long-term investment scaleW4,755T, about US$3.1TComposed of related long-term AI, memory, and infrastructure investments by Samsung Group and SK Group.
• Korea MOTIR's three major projectsSemiconductors, AI robots and Physical AI, AI data centersMOTIR proposed the 3S+1F semiconductor growth strategy, including Speed, Stronghold, Spearhead, and Full Support.
• Memory capacity and Yongin timelineMemory capacity is expected to double within five years; the ramp-up of advanced Yongin fabs is brought forward from 2045-2047 to 2033-2040Reflects the intention of the Korean government and companies to accelerate advanced memory capacity construction.
• Samsung Group investmentW2,655T; of which Samsung Electronics will invest W2,450T during 2026-2040, with W2,100T in semiconductorsIncludes the Yongin fab cluster, existing semiconductor fabs, the Gwangju manufacturing hub, HBM back-end packaging in Cheonan/Onyang, next-generation displays in Asan, and mass-production lines for Physical AI/humanoid robots in Gumi.
• SK Group investmentW2,100T; of which W1,100T goes to memory and W1,000T to AI infrastructureAI infrastructure is planned to reach 15GW by 2035; memory investment includes Yongin, Cheongju NAND, and a potential next-generation semiconductor cluster in the southeast region.
• Estimated investment spending mix60%-70% front-end wafer equipment, 20%-30% infrastructure and clean rooms, with the remainder for back-end packaging facilitiesJ.P. Morgan's internal estimate of the structure of the US$3.1T long-term plan.
• Potential fab scaleMore than a dozen fabs of about 400k WSPM, roughly 2x the current installed DRAM WSPM capacityThis implies that after reaching an inflection point in the late 2020s, the pace of new DRAM capacity construction could be significantly faster than in the past.
• Potential revenue opportunityAbout US$12-20trnEstimated based on US$3T of investment and 15%-25% capital intensity; compared with cumulative revenue of about US$1.2trn for Korean memory makers from 2006-2025.
• Company ratings and prices mentioned in the reportSK Inc(034730.KS/W799,000/OW); Samsung C&T(028260.KS/W478,500/OW)Prices are as of the close on June 29, 2026.

Impact & implications

The investment implication of this report is that Korea's long-term AI and memory investment plan reinforces the position of memory as a strategic asset in the AI compute race. If demand remains strong, capacity expansion and data center construction will support valuations of semiconductor equipment, back-end packaging, power infrastructure, engineering construction, and some group holding companies; however, if investment accelerates near the top of the cycle, the market may worry about supply release, falling prices, and lower returns on capital. Rapid memory price increases could also intensify procurement pressure on consumer electronics customers and bring regulatory, litigation, and customer relationship risks.

Risks

• The long-term investment horizon is very extended, with parts of Samsung Group's and SK Group's plans stretching to 2033E or 2040E, and actual capacity construction may be adjusted with the memory supply-demand cycle.
• Accelerated capital expenditure may be viewed positively in the early to mid cycle, but in the mid-to-late stage or at the peak of the cycle it may be interpreted by the market as future supply pressure and downside price risk.
• The Apple-MU pricing dispute indicates that the market believes the current profit allocation favoring memory manufacturers may be unsustainable, while procurement pressure on consumer electronics brands is increasing.
• U.S. consumers have already launched private class-action lawsuits against the three major DRAM manufacturers, accusing them of artificially creating shortages to drive up prices; no government investigation is involved yet, but this needs continued monitoring.
• Although Chinese DRAM makers intend to expand capital expenditure, the report believes new supply will still be insufficient to close the demand gap; if the supply-demand view proves wrong, it could alter the pricing and investment logic.
• Memory's excessively high share of value within AI capital expenditure has become a focal point of market debate, and if customer demand is suppressed by prices, it could affect long-term demand realization.
• J.P. Morgan has disclosures related to market making, client relationships, investment banking business, and compensation involving Samsung C&T, SK Inc, or related entities, and investors need to make independent judgments in light of conflict-of-interest disclosures.

What to watch

• In the upcoming earnings season and subsequent corporate events, whether Samsung Group and SK Group disclose more specific phased timelines for fabs, AI data centers, and investments.
• Whether the ramp-up timeline for advanced Yongin fabs is brought forward as planned to 2033-2040, and whether SK Group advances Yongin ramp-up from 2045 to 2033 as planned.
• Whether AI and server computing demand in 2H26E-2027E continues to drive polarization in memory demand and support pricing trends for products such as LPDDR.
• After the Apple-MU dispute, pricing negotiations, procurement strategies, and alternative supply arrangements between consumer electronics customers and memory suppliers.
• Whether the U.S. DRAM class-action litigation escalates, and whether any government investigation or further judicial developments emerge.
• Whether new Chinese DRAM supply exceeds expectations, and its impact on global memory supply-demand balance and pricing.
• The actual rollout of the first 5GW phase of AI data centers and the additional 10GW expansion before 2035, including power supply assurance and infrastructure order releases.