Shares of South Korea’s semiconductor heavyweights Samsung Electronics and SK Hynix fell sharply on Monday, even after the government unveiled one of the country’s most ambitious industrial expansion plans.

Samsung Electronics dropped as much as 4.8%, while SK Hynix erased steeper early losses of nearly 6% to trade 1.6% lower, suggesting markets are weighing the financial burden of the planned investments against the long-term growth opportunities created by booming AI demand.

The decline came after President Lee Jae Myung announced sweeping measures to cement South Korea’s position as a global semiconductor and artificial intelligence powerhouse through large-scale investments in manufacturing, data centers and advanced chip technologies.

Under the government’s new strategy, Samsung Electronics and SK Hynix will each construct two new semiconductor fabrication plants in South Korea’s southwest as part of an 800 trillion won ($518 billion) national semiconductor ecosystem project. The initiative is among the largest industrial development programs ever undertaken by the country and is designed to strengthen every stage of the semiconductor value chain, from manufacturing and packaging to AI infrastructure and supply chain resilience.

President Lee said South Korea must move more aggressively than its global competitors if it is to retain its leadership in the technologies driving the next phase of the digital economy.

Artificial intelligence has become the central battleground for semiconductor manufacturers as demand for AI processors, memory chips and cloud infrastructure accelerates worldwide. Governments across Asia, North America and Europe are competing to attract semiconductor investments amid growing concerns over technological sovereignty and supply chain security.

South Korea’s latest initiative is born out of that intensifying global competition.

Trade, Industry and Energy Minister Jung-Kwan Kim said the government intends to eliminate regulatory bottlenecks that have historically delayed large manufacturing projects.

“We will rapidly expand our production capacity by drastically shortening the timeline from licensing to construction,” Kim said.

Accelerating construction timelines has become increasingly important as countries compete to build capacity before AI-related demand peaks later this decade.

The announcement also follows reports that Samsung Group is preparing an even larger long-term investment strategy. According to South Korea’s Maeil Business Newspaper, Samsung plans to unveil a 1,000 trillion won ($646 billion) investment programme spanning the next decade, covering semiconductor manufacturing, artificial intelligence data centers, advanced semiconductor packaging, batteries and display technologies.

The report said approximately 300 trillion won would be allocated to new semiconductor fabrication plants in southwestern South Korea, while another 360 trillion won would fund the Yongin semiconductor cluster, one of the world’s largest chip manufacturing hubs currently under development.

An additional investment exceeding 350 trillion won would be directed toward building AI data centers to support the explosive growth in artificial intelligence computing. The newspaper did not specify whether some of those investments overlap with the government’s newly announced 800 trillion won ecosystem project.

Although the announcements reinforce South Korea’s commitment to maintaining its semiconductor leadership, investors appeared focused on the enormous capital requirements involved. Building advanced semiconductor fabrication facilities has become significantly more expensive as manufacturers transition to increasingly sophisticated manufacturing processes. A single leading-edge fabrication plant can now cost tens of billions of dollars before entering commercial production.

The spending pressure comes as global chipmakers race to meet unprecedented demand for AI infrastructure while simultaneously expanding research into next-generation manufacturing technologies. Samsung and SK Hynix have become two of the most strategically important companies in the AI supply chain because of their dominance in memory chips.

Unlike conventional computing, generative AI systems require enormous amounts of high-bandwidth memory (HBM), an advanced form of DRAM that allows AI processors to move massive quantities of data at extremely high speeds while reducing power consumption.

HBM has emerged as one of the industry’s biggest supply bottlenecks.

SK Hynix has established itself as the global leader in advanced HBM production and remains Nvidia’s largest supplier of high-bandwidth memory chips powering the company’s AI accelerators. Strong demand from hyperscale cloud providers and AI developers has enabled SK Hynix to deliver record earnings in recent quarters.

Samsung Electronics, meanwhile, has been investing aggressively to close the technological gap with SK Hynix in advanced memory products while simultaneously expanding its foundry business and logic chip operations to compete more effectively with Taiwan Semiconductor Manufacturing Co. (TSMC).

Industry analysts expect demand for HBM to remain exceptionally strong for several years as companies including Microsoft, Amazon, Meta, Google, Oracle, OpenAI and xAI continue building massive AI data centers requiring hundreds of thousands of advanced processors.

The South Korean government’s investment programme is also intended to strengthen domestic supply chain resilience at a time when geopolitical tensions have made semiconductor manufacturing a national security priority.

The United States, China, Japan, Taiwan, and the European Union have each introduced substantial incentives to attract semiconductor production, creating an increasingly competitive environment for global chipmakers deciding where to locate future manufacturing capacity.

By combining government support with private-sector investment, Seoul hopes to ensure South Korea remains one of the world’s leading semiconductor production centers even as rivals dramatically increase spending.

Despite Monday’s share price declines, analysts note that the long-term outlook for Samsung Electronics and SK Hynix remains closely tied to the AI investment cycle, which continues to drive record demand for advanced memory chips. However, investors are increasingly scrutinizing whether the industry’s unprecedented capital expenditure plans will generate returns sufficient to justify the trillions of won now being committed to expanding global semiconductor capacity.

After suffering one of its sharpest corrections in years, gold could be poised for a powerful rebound, according to UBS, which believes the precious metal could climb about 28% over the next 12 months as expectations for U.S. monetary policy shift, the dollar weakens, and central banks continue accumulating bullion.

The bullish outlook contrasts with the growing caution among several major investment banks, many of which have recently cut their gold price forecasts after the metal tumbled from record highs amid a stronger U.S. dollar and expectations that the Federal Reserve would keep interest rates elevated for longer.

Spot gold is currently trading around $4,040 an ounce, down roughly 23% from its record highs reached in January, ending a remarkable rally that saw prices surge approximately 150% from around $2,000 an ounce in early 2024 to nearly $5,600 an ounce at their intraday peak in early 2026.

The correction has been driven largely by higher U.S. Treasury yields, renewed dollar strength and fading expectations for imminent Federal Reserve interest-rate cuts, all of which have reduced the appeal of non-yielding assets such as gold.

However, UBS believes investors have become overly pessimistic.

UBS Targets $5,200 Gold

In a research note published on June 25, UBS projected that gold could recover to approximately $5,200 per ounce over the coming year, driven by three major catalysts that it believes markets are currently underestimating.

The first is monetary policy.

According to the Swiss bank, investors have become excessively hawkish following Kevin Warsh’s first Federal Reserve policy meeting as chairman, pricing in a higher probability that interest rates will remain elevated or even rise further.

UBS disagrees with that assessment.

Instead, the bank believes the next meaningful move by the Federal Reserve is more likely to be an interest-rate cut as economic growth slows over the coming year.

Lower interest rates generally benefit gold because they reduce the opportunity cost of holding an asset that generates no income while simultaneously increasing demand for traditional safe-haven investments. UBS expects slowing economic activity to eventually force policymakers to adopt a more accommodative stance, creating favorable conditions for bullion prices.

Weaker Dollar Could Provide Major Tailwind

The second pillar supporting UBS’s bullish outlook is the U.S. dollar. The bank argues that investor positioning in the dollar has become increasingly crowded, while America’s expanding fiscal deficits could gradually undermine the currency.

Historically, gold has exhibited a strong inverse relationship with the dollar because a weaker greenback makes dollar-denominated bullion less expensive for international buyers, supporting global demand.

UBS Global Head of Equities Ulrike Hoffmann-Burchardi said: “A weaker dollar has historically been a powerful tailwind for gold.”

Should the dollar retreat as investors unwind long positions, gold would likely receive additional support.

UBS also believes official-sector demand will remain one of gold’s strongest long-term supports. Central banks have been among the largest net buyers of gold over the past several years as many countries diversify foreign exchange reserves away from the U.S. dollar amid rising geopolitical tensions and increasing fragmentation of the global financial system.

The bank pointed to continued purchases during May, when Poland bought 18 metric tons of gold, while China added another 10 metric tons to its reserves. According to UBS, sustained annual central-bank purchases should continue providing a structural floor beneath gold prices even if investment demand remains volatile.

Beyond its price outlook, UBS continues to recommend maintaining strategic exposure to gold within diversified investment portfolios. Hoffmann-Burchardi suggested that investors consider allocating a mid-single-digit percentage of their portfolios to bullion.

She said gold continues to offer diversification benefits because of its relatively low correlation with traditional financial assets.

“Its relatively low historical correlation with traditional asset classes means that it should add to overall portfolio resilience over time,” she said.

That defensive characteristic has become increasingly valuable as investors confront persistent geopolitical uncertainty, elevated government debt levels and shifting monetary policy expectations.

Contrasting Outlook With Rival Banks

UBS’s optimism stands in contrast to several major investment banks that have recently lowered their gold forecasts following the recent price correction.

Goldman Sachs last week reduced its year-end target to $4,900 per ounce, down from its previous forecast of $5,400, after abandoning expectations for Federal Reserve rate cuts this year. ING has also revised its outlook lower, forecasting gold will average about $4,600 per ounce by year-end instead of the $5,000 it had previously expected.

Earlier, Deutsche Bank likewise trimmed its forecasts, citing softer exchange-traded fund inflows, weaker physical demand from China and India, higher bond yields and a stronger dollar.

Those revisions illustrate how rapidly market sentiment has shifted after gold’s historic rally. Only months ago, some analysts were debating whether bullion could reach $6,000 per ounce, supported by central-bank buying and anticipated monetary easing. Instead, expectations have become more restrained as investors reassess the interest-rate outlook and global economic conditions.

UBS, however, believes the recent sell-off represents a temporary correction rather than the end of gold’s longer-term bull market, arguing that slowing global growth, eventual monetary easing, persistent central-bank demand and a softer U.S. dollar should combine to restore momentum over the coming year.