The Kospi closed down just 0.2%, recovering from a 3.4% drop, following the briefing attended by the two chipmakers' leaders and other industry heavyweights. While Samsung Electronics and SK Hynix ended the day lower, gains in energy, construction and power sectors — essential to supporting the AI capex expansion — held up the benchmark. Small-cap Kosdaq gauge jumped more than 8%.

Samsung Group and SK Group plan to build two chipmaking plants apiece for 800 trillion won ($518 billion), the country's industry minister said Monday. The country as a whole aims to double DRAM production capacity in five years. While investors are digesting the capex expansion's impact on chipmaker profits, most took the government initiative and its determination for AI infrastructure buildout as positive for the broader industry.

"With memory companies currently generating windfall profits, reinvesting into capacity is a positive for Korea's economy and industrial base," said Uday Vikram, co-chief investment officer at Singapore-based Klay Group.

Foreign investors sold a record 7.7 trillion won worth of Kospi shares on Monday, while local funds and retail investors scooped up shares — a dynamic that has been repeated in recent weeks.

The initiative, called "Three Mega Projects for the Big Stride Forward" by the presidential office, comes as insatiable demand for memory chips to fuel global artificial intelligence has placed Samsung and SK Hynix at the center of global tech trade. Share prices for both firms have more than tripled this year at their peaks, but those outsized gains have also left the stocks more vulnerable to swings in AI sentiment.

"Given the political importance of the project, there's still a chance the government follows up with a broader policy package, and that's likely the next thing investors are watching," said Roy Lim, equity sales trader at NH Investment & Securities in Seoul.

--With assistance from Winnie Hsu.