FDI in Korea & Asia 2025: Semiconductors, Batteries, Biotech, and the New Supply Chain Map

📌 Trends in Foreign Direct Investment (FDI) in Korea and Asia ― Reading the Direction of Global Capital (Part 1)

📌 Introduction ― Why is FDI Important?

When we talk about “foreign investment,” there are actually two very different types. One is portfolio investment, such as buying stocks and bonds, which reflects the movement of short-term capital. The other is Foreign Direct Investment (FDI).

While portfolio investment seeks short-term financial returns, FDI is far more long-term and structural in nature. Foreign companies or investors do not merely buy shares. Instead, they build factories, set up research centers, hire local workers, and transfer technology. For example, Samsung building a semiconductor plant in Texas or Hyundai establishing an EV production base in Indonesia are both considered FDI.

Therefore, when FDI flows into a country, it does not just mean that “money came in.” It brings much more than that:

Technology: Advanced manufacturing know-how and R&D capabilities are transferred.

Jobs: New facilities mean expanded local employment.

Market access: Foreign companies use the country as a base to reach surrounding regional markets.

Tax revenue: Factories and corporate entities contribute to the national budget through corporate taxes and payroll taxes.

For these reasons, governments around the world fiercely compete to attract FDI. It is not merely capital inflow; it is a way to secure the future growth engine of the national economy.

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📊 Why is FDI a Critical Economic Indicator?

FDI flows serve as a mirror that reflects both the present and future of a country’s economy.

Short-term indicator: “How much was invested this year?” → Evaluates the country’s attractiveness.

Mid-to-long-term indicator: “Which industries are attracting investment?” → Reveals future growth drivers.

For example, when FDI flows into Korea’s semiconductor and EV battery sectors, it signals that global capital views Korea as a core hub of advanced manufacturing. Conversely, when FDI flows out of China toward Southeast Asia, it highlights a larger strategic shift of supply chain diversification.

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🌍 FDI as the ‘Compass of Global Capital’

FDI is often called the “compass of global capital.” Why? Because capital speaks more honestly than words. Politicians and business leaders can make strategic statements, but the decision to commit billions of dollars to building a plant is an unmistakable signal. By tracking where capital is flowing, one can anticipate the shape of the future global economic landscape.

United States (IRA & CHIPS Act): Steering EV and semiconductor investments toward Korea, Japan, and Southeast Asia.

Japan: Expanding public insurance coverage and stimulating FDI in healthcare and biotech.

China: Facing declining FDI inflows as global companies recognize risks and relocate capital.

Reading these trends is crucial not only for investors, but also for policymakers, business leaders, and ordinary citizens alike.

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✅ Summary

FDI is not just a flow of money.

It is the movement of technology, jobs, tax revenue, and growth opportunities all at once.

Thus, FDI is simultaneously a measure of a country’s economic vitality and its attractiveness to global investors, serving as the clearest signal of where global opportunities lie.

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📌 Part 1. FDI in Korea ― Centered on Advanced Manufacturing

In the past, Korea’s industrial competitiveness relied heavily on textiles, shipbuilding, and home appliances. However, over the last decade, the nature of Foreign Direct Investment (FDI) has changed dramatically. The focus of investment has shifted toward advanced manufacturing and next-generation industries.

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1. Overview of Korea’s FDI Flows

According to Korea’s Ministry of Trade, Industry and Energy, FDI inflows in 2024 reached $30.45 billion. Compared to the pandemic low in 2020, this represents nearly a twofold recovery. More importantly, this is not just a rebound, but a qualitative transformation tied to industrial restructuring and global supply chain realignment.

The momentum has continued into the first half of 2025. In particular, semiconductors, secondary batteries, and biotechnology have accounted for a significant share of FDI, reinforcing Korea’s position in the global economy as a true “hub of advanced manufacturing.”

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2. Semiconductors ― The Heart of the Global Supply Chain

Semiconductors account for the largest share of FDI in Korea.

Case: In 2024, a major U.S. asset management firm and a global foundry company announced a joint plan to build a multi-billion-dollar advanced packaging line in Pyeongtaek, Gyeonggi Province.

Significance: This is not just another production facility. It is a strategic base for high-performance semiconductors tailored to AI and cloud services. For global investors, this signals that Korea is recognized as a core node in the East Asian semiconductor value chain.

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3. Batteries & Electric Vehicles ― Rising as a Powerhouse in Energy Transition

Korea already ranks second only to China in the global EV battery market. FDI inflows are further strengthening this position.

Case: LG Energy Solution, Samsung SDI, and SK On have engaged in joint ventures with American and European automakers, investing billions of dollars in production plants. Many of these facilities in Chungcheong and Gyeonggi provinces are directly linked to automakers, cementing Korea as a hub of the global EV supply chain.

Significance: As of 2025, more than 30% of FDI inflows into Korea are tied to the battery and automotive sectors. This reflects Korea’s emergence not just as a production site, but as a strategic technology leader in the EV era.

👉 From a foreign investor’s perspective, Korea’s battery industry is the “optimal choice to reduce reliance on China while ensuring stable quality and advanced technology.”

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4. Biotech & Pharmaceuticals ― Growth Drivers in the Post-COVID Era

The COVID-19 pandemic significantly elevated Korea’s global standing in biotechnology. As a result, multinational pharmaceutical firms are rushing to expand their presence.

Case: Leading global drugmakers have expanded production and research facilities in Songdo (Incheon) and Osong (Chungbuk). Songdo’s Bio Cluster has now become a “Mecca of Biotechnology” where global pharma firms converge.

Significance: Korea offers lower production costs, stable infrastructure, and a skilled workforce, solidifying its role as a global production hub for vaccines and biopharmaceuticals.

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✅ Summary

Korea’s FDI landscape has moved far beyond being a simple low-cost production base.

Semiconductors → The brain of the AI and cloud era

Batteries → The heart of the energy transition

Biotech → The foundation of future healthcare

For global investors, Korea is no longer just an export-driven economy. It is now viewed as a strategic investment destination offering both advanced technology and reliable supply chains.

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📌 Part 2. FDI in Major Asian Countries ― Different Patterns from Korea

While Korea attracts FDI centered on advanced industries, other Asian countries show different patterns based on their industrial structures and policy environments. Vietnam, India, Indonesia, and China stand out as key examples in the shifting landscape of global supply chains.

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1) Vietnam ― Rapid Growth in Electronics & Textiles

Vietnam has grown into a leading production base in Southeast Asia over the past decade.

Case: Samsung operates massive smartphone assembly plants in Bac Ninh and Thai Nguyen provinces, employing hundreds of thousands of workers. Today, nearly half of Samsung’s smartphones are assembled in Vietnam.

FDI Size: In 2024, Vietnam’s FDI inflows reached $36 billion, surpassing Korea.

Significance: Vietnam remains strong in labor-intensive industries such as textiles, electronics assembly, and furniture manufacturing.

👉 As global companies adopt the “China+1” strategy to diversify away from China, Vietnam has firmly established itself as a low-cost production hub.

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2) India ― The Impact of “Make in India”

India differentiates itself from other Asian economies with its massive domestic market and government-led industrial initiatives.

Policy: The “Make in India” program actively promotes FDI in semiconductors, automobiles, and IT services.

Cases:

Apple expanded its iPhone production lines in Chennai to reduce dependence on China.

Samsung and Xiaomi diversified their smartphone production bases by investing in India.

FDI Size: In 2024, India attracted $71 billion in FDI (UNCTAD), ranking among the highest in Asia.

👉 India offers not only production capacity but also a domestic market of 1.4 billion people, making it an increasingly attractive investment destination.

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3) Indonesia ― Resource-Based FDI

Indonesia is emerging as a hub for resource-driven industrial investment.

Resource Strength: It is the world’s largest producer of nickel, a critical material for EV batteries.

Cases: LG Energy Solution, Hyundai, and China’s CATL have invested billions in new battery plants, with some facilities already in operation.

Significance: By integrating raw material extraction, processing, and battery production within its borders, Indonesia is moving from being just a raw material exporter to becoming a value-added manufacturing hub.

👉 Indonesia’s policy stance is clear: “Don’t just sell raw materials, create added value domestically.”

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4) China ― Decline and Rising Risks

China was once the largest recipient of FDI globally, but recent years show a downward trend.

Decline: In 2024, FDI inflows into China fell by 8% year-on-year.

Causes:

U.S.-China trade tensions and geopolitical risks

Rising labor costs reducing cost competitiveness

Heightened regulations on technology and data creating uncertainty for foreign firms

Shift: Many companies are relocating investments to Korea, Vietnam, and India to reduce dependence on China.

👉 While China still holds enormous domestic market potential, growing political and economic risks weigh heavily on foreign investors.

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✅ Summary

Vietnam: A global assembly hub built on low-cost, labor-intensive industries.

India: A rising manufacturing and IT hub fueled by its domestic market and government policy.

Indonesia: A critical EV battery supply chain hub driven by natural resources.

China: Once dominant, but now seeing declines due to rising risks and costs.

👉 The takeaway: Even within Asia, the nature of FDI varies greatly by country. For global investors, it is not enough to look at “Asia as a whole.” Instead, one must ask: “Which country, in which industry, holds the next opportunity?”

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📌 Part 3. Why Global Investors Care About FDI

FDI is not just about numbers. It allows global investors to gauge a country’s industrial competitiveness, financial stability, and geopolitical positioning. In essence, FDI acts as both an economic thermometer and an investment compass.

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1) Stock Market Signals ― A Barometer of Growth Industries

When massive FDI flows into a particular sector, it signals that foreign capital believes in the sector’s long-term growth.

Case: In 2024, large-scale FDI into Korea’s semiconductor and EV battery industries helped lift SK Hynix and Samsung SDI. Backed by foreign buying, these stocks pushed the KOSPI higher. This was not short-term speculation but a vote of confidence from long-term investors.

Meaning: By simply tracking where FDI is flowing, investors can identify future growth industries — semiconductors and batteries in Korea, IT and autos in India, resource-based EV industries in Indonesia.

👉 FDI thus serves as a fundamental dataset explaining stock market movements.

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2) Exchange Rate Stability ― The Power of Long-Term Capital

FDI also matters for exchange rates because it represents sticky capital.

Short-term portfolio flows can exit overnight, causing volatility.

FDI, tied to physical assets like factories and R&D centers, is far harder to withdraw, providing stability.

Case: In 2023, when the KRW/USD rate spiked above 1,400, announcements of new semiconductor and battery investments reassured markets that capital would remain anchored long-term. This contributed to stabilizing sentiment in FX markets.

👉 For investors, exchange rate stability translates directly into predictable returns.

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3) Supply Chain Geopolitics ― Capital as a Strategic Map

FDI also overlaps with geopolitics.

United States: Through the IRA and CHIPS Act, Washington is channeling semiconductor and battery investments toward Korea, Japan, and Taiwan — an explicit supply chain alliance strategy against China.

China: Facing reduced Western inflows, Beijing is turning to Southeast Asia to diversify.

Japan & India: Both countries are offering generous incentives and subsidies to compete in attracting global capital.

👉 Thus, FDI not only reflects economic opportunities but also conveys a geopolitical message about alliances, risks, and power balances.

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✅ Summary

For global investors, FDI is more than capital flows. It is:

A stock market signal for future growth sectors

A stabilizer for exchange rates

A geopolitical map of supply chain competition

This is why FDI news consistently attracts close attention — it encapsulates industry, finance, and geopolitics in one dataset.

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📌 Part 4. Case Studies & Stories

The meaning of FDI is best understood through real-world cases. The following examples highlight why capital chose these locations.

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📍 Case 1. SK, Hyundai, LG & Indonesia’s Joint Battery Plant

Investment: $9 billion mega-project

Background: Indonesia is the world’s largest nickel producer, while Korea leads in battery technology.

Structure: A joint venture to build a full battery production chain, from nickel supply to processing and assembly.

Significance: A “resource + technology” model, mutually beneficial for both Korea and Indonesia.

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📍 Case 2. AWS & SK C&C Data Center in Korea

Investment: $5 billion project announced in 2025

Objective: AWS aims to establish Korea as the Northeast Asian hub for cloud services.

Significance: This is not just IT outsourcing but a major Big Tech commitment to Korea’s digital infrastructure. It strengthens Korea’s role as a data hub for the entire Asian region.

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📍 Case 3. Japanese Pharma Expands in Korea’s Bio Cluster

Background: Songdo in Incheon has become a global hub for biopharmaceutical production.

Case: Takeda and Astellas, two leading Japanese pharmaceutical firms, set up joint research labs and production facilities in Songdo.

Significance: This enhances Korea’s status as a production base for global pharma while giving Japanese firms geographic and technological synergies.

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📌 Part 5. Conclusion ― Capital Flows Point to the Future

Summarizing the FDI landscape in Asia:

Korea: Advanced industries (semiconductors, foundries, EV batteries, biotech) dominate FDI.

Vietnam & Indonesia: Attract FDI through low-cost labor and resource-based industries.

India: FDI inflows driven by policy support and a huge domestic market.

China: Losing some appeal due to risks and costs, despite still being a major market.

👉 For global investors, FDI is not just data. It is a map of the next opportunities.

For Korean equity and ETF investors: Watch semiconductors, batteries, and biotech.

For ASEAN-focused investors: Pay attention to India and Indonesia’s long-term growth stories.

Ultimately, the direction of capital shapes the future economy. By observing where factories are built and research labs are established, we can anticipate which countries will emerge as winners in the next decade of global competition.

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📌 References

1. Ministry of Trade, Industry and Energy (MOTIE), Korea ― 2024 Foreign Investment Trends Report.

2. UNCTAD ― World Investment Report 2024.

3. Invest Korea (KOTRA) ― Foreign Investment in Korea.

4. OECD ― Korea Economic Snapshot 2024.

5. Reuters ― “South Korea says SK, Amazon to invest $5 bln in country’s biggest data centre” (June 20, 2025).

6. Nikkei Asia ― “Takeda, Astellas expand R&D in South Korea’s Songdo Bio Cluster” (2024).

7. Korea International Trade Association (KITA) ― FDI and Global Supply Chain Reconfiguration Report (2024).