FDI based on notification increased 4.3% to $36.05 billion last year, marking a record high for five consecutive years since 2021
Foreign direct investment (FDI) in Korea reached a record high of $36.05 billion last year. U.S. investment surged by more than 86% compared to the previous year as the government’s artificial intelligence (AI) policy drive combined with high exchange rates.
The Ministry of Trade, Industry and Energy announced the “2025 FDI Trends” containing these findings on Jan. 7.
FDI based on notification increased 4.3% to $36.05 billion last year, marking a record high for five consecutive years since 2021. This represents a 73% increase over five years compared to 2020 ($20.75 billion).
The arrival amount, which represents actual executed investment, increased 16.3% to $17.95 billion, recording the third-highest figure ever.
FDI showed a declining trend through the third quarter of last year but rebounded in the fourth quarter as investments linked to high-tech industries such as artificial intelligence (AI) and semiconductors flowed in significantly.
Large-scale investments were concentrated in the fourth quarter, including Amazon Web Services (AWS)’s AI data center investment, Amkor Technology’s semiconductor back-end process investment, France’s Air Liquide’s semiconductor process gas investment, and Germany’s Sartorius’s bio raw materials investment.
By sector, manufacturing received the most investment. Investment in manufacturing last year reached $15.77 billion, up 8.8% from the previous year. The service sector increased 6.8% year-on-year to $19.05 billion.
Within manufacturing, investment in core materials used in high-tech industries was particularly notable. This is interpreted as efforts to strengthen supply chains amid external uncertainties. Chemical ($5.81 billion) and metal ($2.74 billion) surged 99.5% and 272.2%, respectively.
In contrast, investment in electrical and electronics ($3.59 billion, -31.6%) and machinery equipment and medical precision ($850 million, -63.7%) decreased compared to the previous year.
In the service sector, investment expanded in areas such as AI data centers and online platforms, leading to increased investment in distribution $2.93 billion (71.0%), information and communications $2.34 billion (9.2%), and research and development, professional, and scientific technology $1.97 billion (43.6%). In comparison, finance and insurance decreased 10.6% to $7.45 billion.
By country, the U.S. showed the most prominent investment growth. The U.S. recorded $9.77 billion, up 86.6% from the previous year, as investment inflows expanded centered on metal, distribution, and information and communications sectors. The European Union (EU) also recorded $6.92 billion, up 35.7% from the previous year, with increased investment centered on chemical and distribution sectors.
In contrast, Japan and China recorded $4.4 billion (-28.1%) and $3.59 billion (-38.0%) in investment, respectively.
The significant increase in U.S. direct investment is analyzed to have been influenced by high exchange rates last year.
The biggest contributor to achieving this record performance was ‘greenfield’ investment, which involves directly building factories or business sites. Greenfield investment reached a record high of $28.59 billion, up 7.1% from the previous year. This is significant as it has greater effects on regional economic revitalization and job creation compared to merger and acquisition (M&A) investment, which simply acquires equity stakes.
M&A investment recorded $7.46 billion (-5.1%), decreasing compared to the previous year, but the decline was significantly reduced from the 54.0% sharp drop in the third quarter of last year.
