President Lee Jae-myung's San Francisco Diplomacy: Forging a $1.375 Quadrillion AI Alliance

The Substance of the Lee Jae-myung Administration's San Francisco Diplomacy and the $1.375 Quadrillion AI Alliance

President Lee Jae-myung visited San Francisco, USA, from the 24th to the 25th, holding a series of meetings with the CEOs of global Big Tech companies. The dinner held at the local restaurant The Ramp was attended by global leaders in the artificial intelligence (AI) sector, including Nvidia's Jensen Huang. At this event, President Lee emphasized the absolute position of South Korea's semiconductor industry in the global supply chain. He stated, "Without South Korea, neither AI nor industrial development is possible," presenting a vision for Korea to leap forward as a global AI hub. The scale of semiconductor and AI cooperation between Korean and U.S. companies derived from this state visit was tallied at approximately 1.375 trillion won, reaching up to 1.4 quadrillion won.

Korea's manufacturing competitiveness underpins the establishment of this mega-economic alliance, which goes beyond mere diplomatic pleasantries. At a gathering with the Korean-American community and business leaders, President Lee remarked, "Without Korean semiconductor factories, the global industry would inevitably grind to a halt." In particular, Naver's success in attracting a massive $10 billion investment—approximately 13 trillion won—from Nvidia and the global investment firm Brookfield is cited as a concrete achievement. Furthermore, during his meeting with President Lee, Jensen Huang declared the pursuit of a $500 billion partnership between Nvidia and the SK Group, acknowledging the partnership value with Korean companies. The influx of such massive capital into the Korean market demonstrates that global companies evaluate Korea's technological prowess as an irreplaceable asset.

Three Mega Projects and the Market Impact of Global Supply Chain Restructuring

Through this visit, President Lee officially announced the 'San Francisco AI Declaration.' Based on this, the South Korean government plans to pursue 'Three Mega Projects' to build national infrastructure tailored to the AI era. Deputy Prime Minister and Minister of Science and ICT Bae Kyung-hoon supported this, stating it is "not an illusionary figure, but an executable blueprint." In fact, the government and the Financial Services Commission have initially injected 10 trillion won to foster domestically produced AI semiconductors, spurring technological independence. His direct request to major Silicon Valley venture capital (VC) representatives to work together to create the 'next-generation Samsung' is also interpreted as a policy intent to stimulate the flow of funds throughout the startup ecosystem.

Emphasizing to Big Tech CEOs that "we are a family beyond interests," President Lee declared his commitment to Korea's deep participation as a core partner in global AI projects, estimated to be worth 4.7 quadrillion won.

Diplomatic achievements that solidify the stability of the Korean economy are also notable. A prime example is the European Union's (EU) decision to exceptionally exempt Korea's Sakhalin-2 project LNG exports from its sanctions on Russian liquefied natural gas (LNG) imports. Regarding this, President Lee evaluated that it would "be of great help to the national economy," expressing high expectations for securing energy security. By building an advanced industrial ecosystem while simultaneously securing a stable supply chain for essential energy sources, the country is concurrently establishing a national defense mechanism to respond to massive external shocks.

Domestic Political Hurdles and Economic Outlook Shadowed by Diplomatic Successes

There are also observations that behind these massive numerical diplomatic achievements, domestic political momentum must be accompanied. For the 1.4 quadrillion won semiconductor and AI cooperation between Korea and the U.S. to proceed smoothly, domestic tax reforms and deregulation must be supported. However, the National Assembly remains locked in fierce debate over a bill to abolish the supplementary investigation power. People Power Party floor leader Jung Jung-sik strongly criticized the move, stating that "abolishing the supplementary investigation power will lead to the mutual collapse of the government and the ruling party," thereby putting the brakes on the bill's passage. On the other hand, the Democratic Party has endorsed it as the party's official platform and is pushing for it strongly. Concerns are being raised that if the domestic political sphere fails to keep pace with the speed of industrial ecosystem expansion occurring on the diplomatic front, it could lead to setbacks in investment recovery and performance generation.

Maximizing the tangible effects of attracting investment necessitates a process of controlling market uncertainty. The ambitious real estate policies and tax reform plans announced by the Lee Jae-myung administration are already becoming the subject of political debate. People Power Party spokesperson Cho Yong-sool pointed out that the seller's mortgage method, amounting to 1.77 billion won, which emerged during President Lee's sale of his Bundang apartment, is spreading to expensive apartment markets such as Gangnam and Seocho. While this has drawn criticism for encouraging illegal loans, some analyses suggest it contradicts the administration's will to normalize the market through a comprehensive real estate forum. For capital to flow into productive AI and semiconductor industries, a process of rationally untangling the massive funds tied up in the real estate market must be accompanied.

In the short term, the massive influx of foreign capital is expected to drive earnings improvements for semiconductor equipment stocks and AI-related tech stocks. The government's decision to initially inject 10 trillion won into fostering domestic AI semiconductors is a positive sign for improving the financing environment for small and medium-sized startups. However, for large-scale capital to contribute to the real economy, the fragmented voting behavior of the political sphere must not act as a variable threatening the ecosystem. After President Lee returns from his Latin American tour, the official schedule of the new U.S. Ambassador and the speed of follow-up legislation through the National Assembly are expected to act as key indicators determining market volatility. Whether these successful diplomatic achievements can be translated into sustainable national wealth creation depends on the speed of domestic institutional reforms.