President Lee Jae Myung, center, and SK Group Chairman Chey Tae-won, right, bow to each other after the company announced a massive investment in the southwestern region at the Blue House in Jongno District, central Seoul, on June 29.NEWS1
The 800 trillion won ($517 billion) that Samsung Electronics and SK hynix have pledged for a new semiconductor hub in Korea's southwest will not turn into factories without clearing a long series of hurdles. Power, water and, above all, the talent to staff the plants will decide whether the project succeeds, and all of it depends on how boldly the government is willing to back it.
The two companies and the government announced on Monday that the country's second chip-production base, involving two memory fabs from each chipmaker, would be based in the southwestern region — most likely in Honam, the collective Gwangju and South Jeolla region.
Currently, semiconductor production facilities are clustered around the greater Seoul region, where they face a power and water supply shortage.
The first — and most daunting — hurdle isn't even located in the same province: Get the complex in Yongin, Gyeonggi, on schedule. The two chip giants are seeking to fast-track construction, with Samsung aiming to shave seven years off the timeline while SK hynix is looking to move up operations by 12 years.
"The first task is to build the infrastructure on time so the Yongin fabs run without a hitch, which is what will keep companies reinvesting," said Park Jae-gun, a chair professor at Hanyang University and head of the Korean Society of Semiconductor and Display Technology. "Miss that timing and the Honam plans that follow will topple like dominoes."
Then comes power and water. The government said Monday the southwestern complex would need 6.3 gigawatts of electricity, as much as four or five new 1.4-gigawatt nuclear reactors and about 646,000 tons (155 million gallons) of water a day.
The region's abundant clean energy is a selling point for customers chasing RE100, the global pledge to run entirely on renewable electricity.
"Honam has lots of renewable energy like solar and wind, which is an advantage for meeting the RE100 targets that global information technology companies have taken on," said Choi Ki-young, a former minister of science and ICT who chairs the Institute of Semiconductor Engineers.
The catch is intermittency, with a power supply that rises and falls with the weather. The government's answer is to expand energy storage, but the plan lacks specifics.
An view of Line 15 at Samsung Electronics’ semiconductor plant in HwaseongSAMSUNG ELECTRONICS
"The idea is to expand energy storage to stabilize the grid, but there is no concrete estimate at all of how much storage is needed or what it would cost," said Park Joo-heon, an economics professor at Dongduk Women's University.
Water poses an even greater problem. The ultrapure water that chipmaking requires is difficult to produce, and the region's rivers run thin. Each fab needs about 200,000 tons of water a day, so four operating together would require 800,000 tons, more than the 650,000 the government has projected. The Seomjin and Yeongsan rivers running through the region hold far less water than the Han or the Nakdong, and the Yeongsan ranks worst for water quality among the country's five major rivers.
The Korea Water Resources Corporation (K-water) says the gap can be closed.
"If we combine the 400,000 to 500,000 tons we can secure from dams in the southwest with reallocated river water and the agricultural and power-generation dams of other local governments, we can add more than 300,000 tons," said Yun Seog-dae, the president of K-Water.
The government is also reportedly weighing support for building an ultrapure water treatment plant, which would cost more than 1.3 trillion won.
The biggest barrier, however, is talent. The plan still has to create conditions that keep skilled workers from leaving.
Lights installed at the construction site of Samsung Electronics’ fifth semiconductor plant at its Pyeongtaek campus in Gyeonggi illuminate the night sky on Feb. 24.YONHAP
When Taiwan's TSMC built its first plant in Kumamoto, Japan, in 2023, the Japanese government and local authorities moved up the relocation and expansion of an international school by more than six months to match the plant's completion and offered Taiwanese-language classes for incoming workers and their families.
"Power and water can be solved with money, but the real problem is talent," said Kim Yong-seok, a chair professor at Gachon University's semiconductor college. "To keep people in the region, you have to build out the infrastructure carefully, from schools to culture and the arts."
In the end, the investment hinges on full-throated government support.
"Swift, one-stop administrative support and state-led infrastructure are urgently needed," Jun Young-hyun, the Samsung Electronics vice chairman and head of its chip division, said Monday, pressing the government for speed.
And then, of course, there is timing.
"The real estate and tax issues are so entangled that solving them individually will jeopardize timing," said Lee Min-chang, a public administration professor at Chosun University and a former head of the Korea Association for Regulatory Studies. "The ministries have to throw all their capacities at this and boldly apply a sweeping regulatory sandbox to the region."
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
