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South Korea AI Semiconductor

South Korea’s semiconductor industry continues to expand on the back of strong AI-related demand. Although Korea remains a global leader in memory semiconductors and large-scale manufacturing, its ecosystem is still less developed in system semiconductors, fabless design, AI chips, advanced packaging, and core materials, parts, and equipment. These gaps present significant opportunities for U.S. companies across the semiconductor value chain.

Semiconductor output rose 13.2% year-on-year in 2025, and continued into 2026, with a 28.2% month-on-month increase in February. Exports also remained strong, reaching an estimated $110.4 billion in the first four months of 2026, following record annual semiconductor exports of $173.4 billion in 2025.

The ROK Government is strengthening its AI semiconductor ecosystem through initiatives such as the “K-On-Device AI Semiconductor Technology Development Project”, which plans to invest approximately $664 million from 2026 to 2030. The project aims to launch prototypes by 2028 and develop 10 on-device AI semiconductors by 2030. This could create opportunities for U.S. firms providing EDA tools, semiconductor IP, design verification, AI model optimization software, and chip-design support services.

Other public financing schemes are also supporting further market growth. The approximately $99.6 billion National Growth Fund targets advanced strategic industries, including AI and semiconductors, and includes initiatives to foster domestic AI chips and Neural Processing Unit (NPU) companies such as Rebellions, FuriosaAI, DeepX, Mobilint, and HyperAccel. While the policy is focused on strengthening Korea’s indigenous capabilities, it may also create partnership opportunities for U.S. firms with strengths in chip design, IP, software optimization, connectivity, and global commercialization.

On the manufacturing side, Korea is developing large-scale semiconductor clusters in southern Gyeonggi Province, including Yongin and Pyeongtaek. This mega cluster aims to attract approximately $413 billion in private investment by 2047 and build 16 new semiconductor fabs, including production and research fabs. Given Korea’s prowess in high bandwidth memory (HBM), advanced packaging, and sub-2 nanometer system semiconductors, opportunities for U.S. firms may extend beyond front-end equipment to process control, metrology and inspection, advanced packaging tools and materials, specialty gases, high-purity chemicals, fab automation, and cybersecurity.

Opportunities are not limited to large U.S. multinationals. Small and mid-sized U.S. suppliers may also find viable entry points by establishing localized support near Korea’s major semiconductor clusters through R&D collaboration, application engineering, technical support, and service operations. In addition, technology-complementary partnerships with Korean firms in NPUs, edge AI, physical AI, and AI semiconductors could support both Korea market entry and joint expansion into third-country markets.

If you need more information, contact the U.S. Commercial Service Korea: Songmi Heo, Commercial Specialist, Songmi.Heo@trade.gov.