* President Lee says projects to secure overwhelming

industrial strength

* Investments by Samsung, SK Hynix and local governments top

$576 billion

* Expected southwest chip hub plan aims to ease Seoul-area

concentration

* Critics question infrastructure, skilled labour and

political motives behind the plan

(Adds quotes, details)

By Joyce Lee

SEOUL, June 29 (Reuters) - South Korea rolled out sweeping

chip and AI mega-projects on Monday, as President Lee Jae Myung

pledged to cement overwhelming industry leadership with

investments worth more than $576 billion over several years.

The announcement marks Lee's boldest push yet to align South

Korea's AI and chip ambitions with his pledge to narrow regional

disparities and revive economies beyond the Seoul metropolitan

area.

Lee was joined by the leaders of Samsung Electronics ( SSNLF )

and SK Hynix, the world's two largest

memory chipmakers, for the televised announcement.

"We must secure the core elements of AI faster than any

other country," the president said. "Semiconductors, physical

AI, and AI data centres are the triple axis for our great leap

forward."

Samsung and SK Hynix will invest 800 trillion won ($517.87

billion) with suppliers to build two new chip fabrication sites

each in South Korea's southwest region, he said.

Lee said the country's southwestern city of Gwangju and

South Jeolla province will also invest 5-20 trillion won in the

projects, with a further 81 trillion won expected for a chip

packaging cluster in the Chungcheong area near Seoul.

Lee said the southwest will host major chip production

clusters, drawing on abundant, underused power.

"To meet the rapidly increasing demand for semiconductors,

we need to quickly complete the production hubs that are

currently under construction," he said.

"At the same time, we must secure overwhelming production

capacity in advance through large-scale new investments,

including in the southwestern region. Existing sites centred

around Yongin and Pyeongtaek have already reached their limits."

Representatives of other firms including LG Electronics, HD

Hyundai Robotics, Korea Electric Power Corp and Korea Water

Resources Corp also attended, Lee's office said.

PRESIDENT DEFENDS THE PLAN

High-bandwidth memory (HBM) chips produced by Samsung

Electronics ( SSNLF ) and SK Hynix have become pivotal in the

global race to build advanced AI systems. Both companies already

operate major semiconductor facilities in and around the Seoul

metropolitan area.

South Korean industry minister Kim Jung-kwan said at the

event the country will double dynamic random-access memory

(DRAM) output within five years by bringing forward construction

of fabs in the Seoul metropolitan area to the mid 2030s.

DRAM is a type of memory that is used to power electronics

such as laptops and smartphones and HBM is produced by stacking

multiple layers of DRAM.

Lee defended the proposed southwest chip hub in a series of

X posts over the weekend, rejecting criticism that it favours a

liberal stronghold. He framed it instead as a "national survival

strategy" to ease regional imbalances and expand capacity for

the AI era.

"The creation of a semiconductor industrial ecosystem in

(the southwest) is not a special favour for a particular

region," Lee wrote in one post.

"It is the additional creation of the most rational

semiconductor industrial centre through the decisions of

relevant companies under full government support."

Industry experts say diversifying chip investment beyond

Seoul could ease infrastructure bottlenecks, but warn that

building cutting-edge fabs requires vast electricity and water,

advanced logistics, deep supplier networks and highly skilled

labour - elements that may not scale quickly enough in a new

region to meet surging AI demand.

Opposition politicians have sharply criticised the plan,

questioning whether the proposal is politically motivated given

that 85% of voters in the region backed Lee in last year's

presidential election.

The announcement comes as Lee's approval rating has slid for

six weeks to 46.5%, according to pollster Realmeter.

($1 = 1,544.3800 won)

($1 = 1,538.0000 won)