Samsung, Hyundai to invest $400B at home as Korea-U.S. trade deal sparks outflow concerns

Samsung pledged to invest 450 trillion won ($310 billion) in Korea over five years to sharply expand its chip manufacturing capacity as President Lee Jae Myung voiced concerns that an intensified focus on U.S. investment could come at the expense of domestic spending under the recently concluded tariff deal with Washington.

The chipmaker also began structural construction of its P5 plant in Pyeongtaek, Gyeonggi, which has been on hold since 2024 due to a market downturn, with mass production set to begin in 2028.

Lee held a meeting with the chiefs of seven major conglomerates on the afternoon of November 16 to address follow-up measures to the tariff deal negotiations, under which Korea promised a $350 billion investment package in exchange for lower “reciprocal” tariffs of 15 percent on most exports to the United States.

“It appears we have negotiated well. Yet concerns remain that a surge in U.S.-focused investment could come at the expense of domestic spending. While decisions will be guided by prevailing economic conditions, I would hope that, under comparable circumstances, greater attention would be devoted to nurturing investment at home,” Lee said during the meeting at the Yongsan presidential office in central Seoul on November 16.

A significant portion of Samsung’s investment will be directed toward Samsung SDS’s large-scale AI data center in South Jeolla, where the company plans to secure 15,000 GPUs by 2028 and offer access to academia, startups and small- and medium-sized enterprises.

Samsung Electronics plans to intensify its focus on the AI data center market through the establishment of a local production line for FlaktGroup, Europe’s largest heating, ventilation and air conditioning company, which it acquired in early November.

Samsung SDI is eying Ulsan for its first mass-production plant for solid-state batteries, dubbed dream batteries for their high energy density.

Samsung Display is set to commence full-scale production of its latest organic light-emitting diode for information technology applications next year, once construction of the facility at its Asan plant in South Chungcheong is complete.

“While the current economic climate remains challenging, we remain committed, as pledged last September, to hiring 60,000 people over the next five years,” Samsung Electronics Executive Chairman Lee Jae-yong said during the meeting, adding that he will also “intensify efforts to invest in domestic facilities, including research and development [R&D].”

Hyundai Motor Group also unveiled its largest-ever five-year investment plan, pledging 125.2 trillion won in Korea through 2030, a dramatic increase compared to 89.1 trillion won from 2021 to 2025.

Roughly 50.5 trillion won will go into new businesses like AI, software-defined vehicles, robotics and hydrogen, while another 38.5 trillion won has been allocated to R&D for the existing mobility industry, and 36.2 trillion won for standard investment required for regular operations.

Hyundai was the biggest beneficiary of the recent tariff deal, as the cut in tariffs to 15 percent from 25 percent will trim the company’s annual burden by roughly 4 trillion won, narrowing the disadvantage it had faced against major rivals such as Toyota Motor and Volkswagen.

Hyundai will also shoulder the full amount of U.S.-bound tariffs imposed on its primary parts suppliers this year by tacking the levies they incur while shipping components to Hyundai’s U.S. plants directly onto the purchase price — an assistance program the company plans to extend to more than 5,000 secondary and tertiary vendors in the coming years.

“The centerpiece of the investment will focus on nurturing Korea’s AI and robotics industries and advancing the green energy ecosystem, with a plan to build an AI data center for global competitiveness in physical-AI fields such as autonomous driving, autonomous manufacturing and robotics, and to construct a robot manufacturing and foundry plant capable of producing a wide variety of robotic products,” Hyundai Motor Group Executive Chair Euisun Chung said in the meeting.

The focus is part of the partnership forged with Nvidia CEO Jensen Huang, who vowed to supply Korea with 260,000 GPUs, some 50,000 of which will go to Hyundai, during his visit to Korea late last month.

“We have hired 7,200 people this year, and will ramp up that to 10,000 next year, with a concentration in software-defined vehicles and mobility,” Chung added.

The company aims to raise overseas shipments from 2.18 million vehicles last year to 2.47 million by 2030, with exports of electrified models including EVs and hybrids set to surge more than two-and-a-half-fold to 1.76 million over the same period.

SK Group vowed at least 600 trillion won in investment in Korea for AI and chips, though specific details about the timeline have not been disclosed. It will hire around 20,000 employees every year through 2029.

“SK is planning a data center with Amazon Web Services in the southeastern region and one with OpenAI in the southwestern region, and we will continue discussions with other companies to accelerate the establishment of AI data centers and supporting infrastructure,” SK chief Chey Tae-won said.

LG Group has committed to a 100 trillion won investment in Korea over the next five years, and of that, 60 percent will go toward materials, parts and equipment.

Hanwha plans to invest roughly 11 trillion won domestically over the next five years in the shipbuilding and defense sectors, with an intention to invest of around $5 billion in Philly Shipyard in Pennsylvania, while simultaneously pursuing acquisitions of U.S. shipyards and the construction of new facilities.

The pledges poured in after Korea unveiled a $350 billion investment package — including $200 billion in direct investment with an annual cap of $20 billion — under the joint agreement finalized with the United States on November 14.

The investment sector will include shipbuilding, energy, semiconductors, raw materials, pharmaceuticals and AI, and the projects will be determined through January 2029, before the end of U.S. President Donald Trump’s term.

Forthcoming duties on pharmaceuticals will be capped at a maximum rate of 15 percent, while Seoul also secured a commitment from Washington that chip tariffs applied to Korean exports will be “no less favorable than the terms that may be offered in any future agreement covering a volume of semiconductor trade at least as large as Korea’s.”

However, tariffs on steel products will remain at 50 percent.

Funds required for the projects must be deposited no earlier than 45 business days after receiving official notification of the approved U.S. investment destination.

Investment projects will be selected by Trump, based on recommendations from an investment committee chaired by U.S. Secretary of Commerce Howard Lutnick. The committee must consult in advance with a consultative body chaired by Seoul’s industry minister, Kim Jung-kwan, and recommend only investments that are “commercially reasonable.”

Failure to meet U.S. investment contributions could trigger higher tariffs, according to the agreement.

The distribution of investment returns will be allocated on a 50-50 basis between Korea and the United States until principal and interest obligations are fully repaid. After that, the allocation will shift to a 90-10 split in favor of the United States.

BY SARAH CHEA  [chea.sarah@joongang.co.kr]