Following South Korea's announcement of a major national project for artificial intelligence and semiconductors, shares of Samsung Electronics Co Ltd and SK Hynix Inc declined on Monday.

The two chip giants are set to build two new semiconductor wafer fabrication plants each in the country's southwest region. This national-level project involves a total investment of 800 trillion won, equivalent to approximately $517.87 billion.

President Lee Jae-myung presented the plan, aiming to solidify the nation's leading position in semiconductors through substantial investment and the addition of new manufacturing capacity.

After South Korea revealed its ambitious development blueprint for AI and semiconductors, which is expected to attract hundreds of billions of dollars in investment over the coming years, the stock prices of Samsung Electronics and SK Hynix moved lower on Monday.

Samsung Electronics shares fell by 4.8%. SK Hynix shares dropped nearly 6% in early trading before paring losses to close 1.6% lower.

President Lee Jae-myung outlined the development strategy, which relies on large-scale capital investment and new manufacturing output to strengthen South Korea's leading edge in the semiconductor industry and enhance its domestic AI infrastructure. He stated that the country must outpace competitors to secure core foundational technologies for the AI era.

The government indicated that, as a key part of the national semiconductor ecosystem project valued at 800 trillion won (around $518 billion), Samsung Electronics and SK Hynix will each construct two new semiconductor wafer fabrication facilities in the southwest of the country.

Industry Minister Bang Moon-kyu stated, "We will significantly shorten the period from project approval to the start of construction to rapidly expand domestic chip production capacity."

A report from a South Korean newspaper earlier this week suggested that the Samsung Group is preparing to announce an investment plan totaling 1,000 trillion won (approximately $646 billion) over the next decade.

The reported ten-year investment roadmap covers multiple areas including semiconductor wafer fabs, AI data centers, advanced packaging, power batteries, and display panels. Approximately 300 trillion won is earmarked for new wafer fabrication plants in the southwest, 360 trillion won is directed towards the Yongin semiconductor cluster, and over 350 trillion won is allocated for AI data centers. The report did not clarify whether these investment figures overlap.

Amid the current AI industry boom, Samsung Electronics and SK Hynix have become key global players. Major cloud service providers and technology companies are racing to build out AI computing infrastructure, leading to a supply shortage for high-bandwidth memory (HBM) chips.

SK Hynix is a primary supplier of high-end HBM chips to Nvidia, while Samsung continues to increase its research and development efforts to narrow the technological gap with its domestic rival.