A 475.5 Trillion Won Mega Project Emerges.

• Still just a plan, but it’s the largest in history.
• Three mega-projects were announced: semiconductors, AI data centers, and physical AI. The Honam (Southwest) region will be developed as the second semiconductor production hub after the capital area.
• Samsung Electronics and SK Hynix will each invest 425 trillion won and 400 trillion won in Honam, building two memory fabs apiece. No specific investment timeline was given.
• Lee Jae-myung (President) emphasized, “The Yongin + Pyeongtaek site is nearing its limits in power and water supply,” adding, “We must expedite and accelerate the planned sites.”
• The completion of the Yongin general industrial complex (SK Hynix) will be moved up by 12 years, from 2045 to 2033, and the national industrial complex (Samsung Electronics) by 7 years, from 2047 to 2040.
• The Chungcheong region will be developed as a packaging (back-end) hub, while the Southeast-Daegu/Gyeongbuk region will become an innovation hub for materials, parts, and equipment (so-called “sobujang”).
• Kim Jeong-gan (Minister of Trade, Industry and Energy) unveiled the “3S+1F” strategy: full support (Full-support) added to speed (Speed), stronghold (Stronghold), and spearhead (Spearhead). The vision is to “turn the entire Republic of Korea into a single semiconductor cluster.”
• Samsung and SK’s investment plans total 265.5 trillion won and 210 trillion won, respectively, summing to 475.5 trillion won—twice the size of South Korea’s GDP.
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What Matters Now.

Plans Remain Plans.

• Newspapers differ slightly on figures, but the broad direction aligns: 1,500 trillion won in new investments, reflecting both short-term and long-term plans up to 3,200 trillion won. Numbers kept changing until the final announcement.
• Samsung Electronics initially stated in a disclosure that investments would extend to 2040, then issued a correction 30 minutes later clarifying it as “a forward-looking plan based on current conditions” and “a guideline for understanding.”
• SK Hynix also disclosed, “Investments will be finalized following board approval.”
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“These Men Are National Heroes.”.

• Lee Jae-yong and Choi Tae-won were brought onstage, and with a 90-degree bow, he said, “On behalf of the people, I offer my gratitude.”
• The event space was arranged in a ‘Choi Tae-won on the left, Lee Jae-yong on the right’ formation.
• Lee Jae-myung (President) promised to assign a direct reporting officer at the Blue House solely for this project and to personally oversee the three mega-projects. “From revising policies and laws to any necessary innovation, we will not hesitate.”
• “Government’s role is not to force companies to bear losses and risks, but to channel capabilities so they invest without loss and with better prospects,” he clarified.
• Kim Jeong-gwan was appointed as the ‘Semiconductor Czar.’ Plans include up to 100% state funding for underground power grids, water reuse, and renewable energy facilities. The Czar will have full authority.

550 Trillion Won for AI Data Centers: Korea’s Stargate.

• SK Telecom, GS, and Naver will invest 550 trillion won in AI data centers.
• By phase one (2029), facilities equivalent to eight nuclear reactors—8.4GW—will be built. Candidate sites include SK Telecom in Ulsan (1GW), GS in Donghae (2.4GW), and Naver in Sejong (1GW). By phase two (15GW), the total investment could reach 1,000 trillion won.
• It’s a project comparable to the Stargate Project, where OpenAI and SoftBank are building data centers with 500 billion dollars.
• Byung-hun Bae (Minister of Science and ICT) described the government’s full AI data center plan: “This could position Korea as the largest AI infrastructure hub in the Asia-Pacific by 2030.”
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Physical AI as a National Strategic Industry.

• We aim to develop a world-class proprietary foundation model within three years and achieve global leadership in Physical AI by 2030. The next three years are the golden time.
• AI robots target a global top-three ranking.
• Robot production hubs will be established in Saemangeum, Jeollabuk-do, and the Daegu-Gyeongbuk region. Hyundai Motor Group will invest 9 trillion won in a robot foundry (contract manufacturing) plant in Saemangeum, while the Daegu-Gyeongbuk region will host a robot demonstration complex linked to automotive, shipbuilding, and electronics industries.
• Kim Jeong-gwan (Minister of Trade, Industry and Energy) emphasized, “We must transition from being a country that uses robots well to one that makes them well.” The plan aims to raise South Korea’s global humanoid market share from 1% to 20%. Currently, China holds 86%, the U.S. 4%, and South Korea 1%.
• Data is the biggest hurdle. Bae Byung-hun pointed out, “While generative AI has secured data equivalent to 100,000 years, Physical AI has only about 10,000 hours.” A world model must be created by collecting manufacturing data and generating synthetic data through virtual simulations. The government and private sector will jointly invest 20 trillion won to build a national manufacturing data library that trains AI on skilled workers’ field expertise (tacit knowledge).
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6.3GW of Power and 650,000 Tons of Water Daily.

• Immediate power needs for the Honam semiconductor cluster stand at 6.3GW—equivalent to four to five nuclear reactors. Including data centers, an additional 18.4GW must be secured.
• Chosun Ilbo criticized, “Concrete details were expected, but the government only made a generic declaration of responsibility for supply.”
• Jeonnam-Gwangju has the nation’s highest renewable energy capacity at 8GW. Park Joo-heon (Professor, Dongduk Women’s University) noted, “The plan relies on expanding ESS (energy storage systems), but there is no concrete estimation of how much is needed or the costs involved.”
• Water supply figures have also shifted. Initial discussions mentioned 1 million tons daily, but the announcement reduced this to 650,000 tons. Korea Water Resources Corporation can supply an additional 400,000–500,000 tons daily alone.
• The Hankyoreh analyzed, “The Yeongsan and Seomjin rivers currently use only 40.1% of their permitted water quotas, leaving room.”
• The JoongAng Ilbo pointed out, “The Yeongsan River has the worst water quality among the five major rivers, and four fabs would require 800,000 tons of water daily.”
• Kang Hoon-sik (Blue House Chief of Staff) stated, “The government is not incompetent enough to announce without verification.” He explained, “We will bundle multiple water sources into a diversified system, and our calculations show over 1 million tons can be supplied.”
• Lee Joong-yeol (Director, Water Welfare Research Institute) countered, “If droughts empty dams, the concept of ‘surplus capacity’ itself collapses.”
• In an editorial, Chosun Ilbo added, “A plan to supply hundreds of thousands of tons of ultrapure water daily to Honam, where water self-sufficiency is only 20%, and power strategies omitting ESS cost-sharing lack realism.”
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A Historic Turning Point? “National Fracture Development” Grievances.

• People Power Party criticized, “State-controlled allocation of national strategic industries based on political logic.” Shin Dong-wook (People Power Party Supreme Council Member) claimed, “They’ll all end up in jail later.”
• Min Hyung-bae (President-elect of Jeonnam-Gwangju Integrated Special Self-Governing Province) said, “Of the 20 trillion won in integrated support funds, we will allocate at least 5 trillion won—and if needed, all of it—to back this initiative.”
• Daegu-Gyeongbuk strongly protested. Lee Cheol-woo (Gyeongbuk Governor) argued, “If a fab is established in Gwangju-Jeonnam, over 470 semiconductor companies in Daegu-Gyeongbuk will relocate en masse, devastating the regional economy.” Choo Kyung-ho (Daegu Mayor-elect) protested, “This is not balanced national development—it’s national fracture development.”
• Ahn Cheol-soo (People Power Party lawmaker) claimed, “The Honam semiconductor cluster will create countless land barons,” adding, “The Lee Jae-myung administration must disclose land holdings in Honam by public officials and Democratic Party lawmakers.”
• Han Byung-do (Democratic Party floor leader) retorted, “This stems from ignorance of global corporate survival strategies.”
• A Democratic Party lawmaker interviewed by Chosun Ilbo said, “If the perception spreads that Honam received special favors, Democratic Party candidates outside Honam could struggle in the 2028 general election.”
• The Hankyoreh editorial noted, “There is no basis to claim Honam’s industrial location competitiveness is particularly weak.”
• The JoongAng Ilbo editorial stated, “It is solely the government’s responsibility to dispel controversy—whether industrial judgment was sidelined in favor of regional balance, coercing corporate decisions during site selection.”
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Deep Dive.

South Korea’s Semiconductor Investments Draw Global Attention.

• International media has shown significant interest. The Wall Street Journal reported, “Samsung Electronics and SK Hynix have decided to invest over $520 billion in memory chips in southwestern South Korea.”
• It also included critical perspectives, noting, “The region is too remote and unlikely to attract talent.”
• Lee Jae-myung (former Gyeonggi Governor) emphasized, “While growth and profits might tempt companies to stay in the capital region, balanced development is crucial.” He explained that tax incentives would serve as compensation.
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Where Will the Judiciary Committee Chair Stand?

• Clashes are intensifying over the formation of standing committees for the second half of the year.
• The People Power Party insists, “If we don’t secure the Judiciary Committee chairmanship, we will abandon all standing committee leadership positions.” The Democratic Party claims, “If the People Power Party refuses to negotiate, we will take all 18 standing committee chair positions.”
• The Judiciary Committee is the final gatekeeper for bill submissions. Its chair holds immense power.
• The Kyunghyang Shinmun pointed out, “The Democratic Party’s legislative dominance narrative could be further reinforced.”
• According to Chosun Ilbo, one Democratic Party lawmaker stated, “Even with the burden of unilateral control, it’s better to resume parliamentary operations as soon as possible.”
• The People Power Party argues that to prevent the ruling party’s unilateral governance, the Judiciary Committee chair must be held by the opposition.
• During the first two years of the 22nd National Assembly, the Democratic Party passed 320 bills through solo voting. Solo-passed bills surged from 7 in the 20th Assembly, 63 in the 21st, to a record high in the 22nd. Plenary sessions held while the People Power Party boycotted also increased from 9 in the 20th, 17 in the 21st, to 27 in the 22nd.
• Cho Jung-sik (National Assembly Speaker) has scheduled a plenary session for the 30th.
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Democratic Party’s Lineage Dispute.

• Lee Jung-gyu (Democratic Party Leader) said, “I am a Roh Moo-hyun protege,” while Kim Min-seok (Prime Minister) claimed, “I am a Kim Dae-jung protege.”
• Song Young-gil (former Democratic Party Leader) appeared on KBS and argued, “Lee Jung-gyu turned his back on Roh Moo-hyun (former president) and didn’t even attend his funeral,” adding, “If we’re discussing legitimacy, Lee Jung-gyu doesn’t qualify.”
• Lee Jung-gyu countered, “This is 100% false information,” and warned, “If an apology isn’t received, I will take necessary measures to defend my reputation.”
• Park Ji-won (Democratic Party lawmaker) chimed in, “Who else in the party embodies the Democratic Party’s legitimacy as much as Kim Min-seok?”
• The dispute over the supplementary investigation authority continues. Kim Min-seok insisted, “We aimed to resolve it in May, but it was postponed due to the party’s request,” while Lee Jung-gyu denied, “I have no memory of a May resolution proposal.”
• A Democratic Party lawmaker interviewed by The Hankyoreh remarked, “I’m Team Kim, Team Park—aren’t these debates from the Goryeo era? This is too regressive.”
• Speculation grows that the July 1 luncheon between Lee Jae-myung and Moon Jae-in (former president) could be a turning point.
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Jang Dong-hyeok Says, “No Resignation.”.

• Jang Dong-hyeok (People Power Party Leader) dismissed speculation, stating, “Regardless of any decision by the general assembly or remarks by the Supreme Council, I will not resign.” This marks the fourth public clash since the local elections.
• Woo Jae-jun (People Power Party Supreme Council Member) argued, “For the party to unite as one team, Jang Dong-hyeok must step down.”
• There are concerns that Jang Dong-hyeok might purge dissenters via the Ethics Committee. A People Power Party lawmaker interviewed by Kyunghyang Shinmun said, “The mood is to wait and see, but if disciplinary actions against lawmakers actually proceed, many will not remain silent.”
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Will the Property Tax Card Be Played?

• Late July is the likely timing, with plans for a public forum beforehand.
• Three main measures are under discussion: First, increasing the tax burden on owners of ultra-luxury homes; second, raising the fair market value ratio from 60% to over 80%; third, reducing long-term holding tax deductions for households that hold but do not reside in properties.
• Park Won-gap (KB Kookmin Bank Senior Researcher) predicted, “Listings will emerge among those over 70 and some rental business owners.” Woo Byung-tak (Shinhan Bank Pathfinder Senior Researcher) noted, “The Moon Jae-in administration raised property taxes to record levels, but prices still rose and no listings materialized.”
• From January to June 22, Seoul apartment prices rose 4.8%. The biggest jump was in Dongtan, Hwaseong City, which saw a 11.4% increase after Samsung Electronics’ bonus payouts.
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Could We Build Apartments on Closed Schools?

• Of 4,008 closed schools, 2,640 have already been sold. Of the 1,368 still held by education offices, some are used as sports facilities—but none have been turned into public rental housing.
• Seoul has only seven closed schools. The former Gonghang High School site in Banghwa-dong remains vacant for seven years, despite its proximity to the 5th Line’s Gaehwasan Station.
• Converting school land to housing requires sale or asset transfer procedures, lifting urban planning designations, and changing land-use categories. A “Special Act on School Land Development Support” awaits plenary approval, but local opposition remains a wildcard.

Do Statistics Fuel Housing Prices?

• Calls to halt the weekly real estate trend disclosures are also emerging.
• The Korea Real Estate Institute surveys prices using a sample of 33,500 apartments nationwide, often reflecting surrounding market rates when no transactions occur.
• Lee Hun-wook (Korea Real Estate Institute Director) stated, “I understand there are almost no global precedents of weekly trend reports being published as official national statistics.”
• Chosun Ilbo pointed out, “Whenever calls to abolish real estate statistics arise, suspicions emerge that the government is trying to evade responsibility for policy failures and suppress unfavorable public opinion.”
• Past administrations also faced statistical abolition debates whenever prices rose. Yoon Ji-hae (Head of Real Estate 114 Proptech Research Lab) said, “It’s difficult to conclusively attribute rising prices to weekly statistics—they stem from market supply and demand.”
• The median transaction price for apartments in 11 southern Seoul districts surpassed 1.6 billion won in June. The median jeonse price is 700 million won. The average transaction price is 1.97 billion won.
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Comprehensive Real Estate Tax: 540,000 Payments.

• As home prices rose, the number of taxpayers increased by 18%. Determined tax amounts grew by 20% to 1.309 trillion won.
• Over half (741.1 billion won) of the tax came from Seoul.

Another Take.

KOSPI’s Odd-Even Game.

• It has swung wildly for days—soaring one moment, plummeting the next.
• On the day the government announced its three mega-projects, foreigners net-sold 7.7 trillion won—the largest-ever scale. They offloaded 3.8 trillion won worth of Samsung Electronics and 3.3 trillion won of SK Hynix. Thanks to retail investors propping them up, the stocks only fell 4.9% and 1.7%, respectively. The KOSPI also limited its drop to 0.2%.
• The KOSPI closed at 8,394.65, down 0.2%. The Hankyoreh noted that despite 820 of 918 listed companies rising, the index was dragged down by the steep declines of two stocks.
• The VKOSPI, dubbed Korea’s “fear index,” hit a record high of 96.94.
• The KOSDAQ surged 8.1% to close at 920.57.
• U.S. markets rose yesterday. The S&P 500, Dow, and Nasdaq gained 1.18%, 0.59%, and 2.07%, respectively.
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Highest Exchange Rate in 17 Years.

• The won-dollar exchange rate hit 1,545.2 won.
• The highest level in 17 years and 3 months since March 9, 2009 (1,549.0 won).
• Moon Jung-hee (KB Kookmin Bank Researcher) analyzed, “The appropriate exchange rate is around 1,400–1,420 won, but foreign investors’ continuous net selling of stocks has kept it from falling below 1,500 won.”

AI Overheating: Could It End in Long-Term Investment Collapse?

• The Bank for International Settlements (BIS) has issued a warning. Despite astronomical-scale investments continuing, the BIS pointed out, “If performance does not sustain it, funding could dry up, leading to investment collapse.”
• Warnings about potential issues with hyperscalers’ circular financial transactions are also notable. There are observations that they might be inflating their size by exchanging equity investments and revenue support.
• Analysis also suggests that SpaceX’s upcoming listing signals entry into a bubble phase. Historical bubble collapses show that capital was sucked in beyond what could justify expected returns, ultimately ending in investment reversal and recession.
• The BIS warned that the AI bubble’s shock could be greater. Stock exposure is higher than ever, and inflation is already severe.
• Related Link.

It’s Simple: AI or Not.

• Ruchir Sharma (Rockefeller International Chairman) analyzes the new world order.
• Who wins?
• First, the US and China developing foundation models.
• Second, Taiwan and South Korea manufacturing semiconductors.
• Third, Japan and Israel securing AI capabilities.
• Partial winners?
• First, Mexico, Thailand, and Vietnam exporting hardware.
• Second, Malaysia and Singapore hosting data centers.
• Who loses? Most European countries excluding the Netherlands, plus India and the Philippines lagging in AI industries.
• AI-related stocks now exceed 40% of the US market cap and are delivering over 80% expected returns this year.
• During the dot-com bubble, top 3 tech sectors drove 60% of global equity gains—today, semiconductors, hardware, and electronic equipment sectors account for over 70%. Not coincidence or luck: thriving nations invested over 3% of GDP in R&D.
• How long will it last? Like the internet frenzy, a speculative bubble may burst before a more balanced market emerges. Until then, AI will continue dictating the lineup.
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“This Is How You Ruin the AI Market.”.

• This refers to the U.S. government halting Anthropic’s Claude 5 sales. Just because the U.S. blocks it doesn’t mean China will sit back and watch. The growing use of Chinese open-source AI is also concerning.
• Paul Kedrosky (venture investor) remarked, “A chaperone has appeared at the party, watering down the cocktails.”
• Axios pointed out, “Access to frontier AI is becoming too critical a value to leave to the opaque discretion of governments.” The situation grows more problematic if beneficiaries are selected before rules are clarified.”
• Related Link.

“Even Redevelopment Is Possible—The People Decide.”.

• Hong Ik-pyo (Chief of Staff to the President for Political Affairs) responded to Yu Si-min (author)’s redevelopment theory.
• Regarding Yu’s remark that “supporters expected expansions but now face redevelopment without consent,” Hong said, “I believe there’s also redevelopment beyond expansion or reconstruction,” adding, “Rather than internal debates, a process of listening to the public’s opinion seems necessary.”
• The statement implies confidence in securing public support.
• Park Ji-won (Democratic Party lawmaker) attempted damage control: “Invoking Kim Dae-jung after Roh Moo-hyun, Moon Jae-in, and Lee Jae-myung—what good does this grave-digging serve?”

Shocking Cheer: “Starbucks, Tank Day.”.

• Chants shouted by Baejai High School players toward Gwangju Jeil High School players during the Cheongryonggi High School Baseball Championship. The slogan evoked Starbucks Korea’s May 18 “Tank Day” event.
• A Gwangju Jeil coach strongly protested, saying, “Cut it out, why Starbucks?” and the game briefly halted as the umpire issued a warning.
• Baejai High posted an apology on their website that afternoon, stating, “The case will be referred to the student life education committee for strict handling according to school regulations and procedures.” It was not just a few students—nearly the entire team chanted in unison, and neither the coach nor the manager intervened.
• The Seoul Metropolitan Office of Education has launched an investigation. An official stated, “Language that trivializes historical trauma or disparages specific regions is absolutely unacceptable.”
• Related Link.

The Fix.

“I Thought If I Hold On, Everything Collapses.”.

• “I felt like shouting that there’s a fire here.”
• These were the words of a Jeonbuk National University Hospital doctor who worked 90-hour weeks. It means the problem cannot be solved by sacrificing a few individuals.
• Kim Jin-kyu (Professor of Pediatrics at Jeonbuk National University Hospital) submitted his resignation, saying, “After much deliberation, I reached a conclusion.”
• Jeonbuk National University Hospital had only two pediatric professors remaining after two others left. Kim Jin-kyu had single-handedly managed the neonatal intensive care unit.
• Related Link.

Regional Economies Too, Semiconductors Hard-Carrying.

• First-quarter GRDP (Gross Regional Domestic Product) grew 3.8% nationwide compared to the same period last year.
• By region, the capital area’s GRDP rose 5.2%, followed by Chungcheong (4.2%), Daegu-Gyeongbuk (2.3%), and Southeast (2.0%). Honam recorded 0.0%.
• Chungbuk’s 13.8% and Gyeonggi’s 6.2% growth were driven by the semiconductor industry boom.
• Related Link.

ICYMI.

Europe Also Struggles with Ali-Temu’s Free Shipping.

• The European Union had applied a de minimis exemption for items under €150 but decided to charge €3.
• Low-cost shipments surged from 1.3 billion in 2022 to 5.9 billion in 2025—90% from China—devastating retail and hollowing out city centers.
• Many products fail safety standards: 60% of online goods violated EU regulations. A €200 million fine was imposed on Temu.
• Shein is opening a large logistics center in Poland to bypass tariffs.
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Is a Weight-Loss Drug a Fountain of Youth?

• Semaglutide slowed biological aging after eight months, according to a study.
• GLP-1 regulates insulin and blood sugar, reduces weight, and benefits the cardiovascular system, liver, and kidneys. It also has anti-inflammatory effects. Some argue it deserves the title of “longevity pill” since it prevents diabetes and cardiovascular diseases, leading causes of death.
• No data exists on its effects in healthy individuals, and no mouse studies have been conducted. Concerns include muscle loss (sarcopenia) and reduced bone density (osteoporosis).
• Experts do not recommend off-label use for longevity purposes.
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Worth Reading.

Conservative Media Cheers, Except Chosun Ilbo.

• Hankyoreh assessed, “This could be an opportunity to break away from the capital-centric system and transition to a multi-polar growth structure by region.”
• Hankyoreh noted, “Framing the Honam semiconductor cluster as ‘government control’ and ‘favoritism’ to politicize it is a distorted form of regionalism.”
• Segye Ilbo emphasized, “Resolving infrastructure uncertainty is the most urgent task.”
• Donga Ilbo stressed, “Now, the key is not ‘where’ to invest but ‘how’ to turn it into results.”
• The Hankook Ilbo advised in an editorial, “Infrastructure must be established first to dispel accusations that the conclusion to focus on Honam was rushed under pressure.”
• Kukmin Ilbo urged speed: “We should benchmark Taiwan’s Kaohsiung cluster, which took four years from planning to operation.”
• Chosun Ilbo remained cynical: “Alongside criticism that this is a ‘political semiconductor’ aimed at the ruling party’s August convention, regional conflicts and political controversies—such as ‘Honam vs. Chungcheong’—are growing.”
• “What’s needed,” it added, “is not one-sided boasting but precise measures to eliminate on-the-ground uncertainties.”
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Cold Peace, No Presidential Enthusiasm.

• Seo Ui-dong (Khan Newspaper columnist) pointed out, “The ‘Korean Peninsula peace’ agenda seems to have been pushed down in the diplomatic priorities of the Lee Jae-myung administration.” There are two signs.
• First, he adopted a joint statement urging North Korean human rights improvements after meeting with European leaders.
• Second, he requested Donald Trump again to play the role of a peace broker.
• Seo criticized, “It is hard to agree with the argument that we should once again entrust the fate of the Korean Peninsula to the ‘human roller coaster’ Trump.” The commentary added, “We must escape from non-autonomous thinking that restricts our own scope of action by worrying about ‘American sentiment’ at a time when even the U.S. is seeking improved relations with China and Russia.”
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Open Run Book Fair.

• Seoul International Book Fair ended this year with 150,000 tickets sold out.
• “As readers themselves have become rare, the act of reading now stands out as an intellectual and distinctive image. What was once too common to be special has, in an era where everyone consumes video content, become a way to showcase ‘my unique taste that sets me apart.’”
• Jeong Myeong-jin (Financial News Culture & Sports Editor) explained, “Certification shots holding book covers, reading scenes in book cafés, and uploading captions of favorite sentences—all have become content.” The analysis: “It differs from traditional reading culture in that it transforms reading from a ‘result’ into a ‘display of process.’”