Can Gwangju handle southwestern semiconductor project?

Park Su-ryon

The author is the deputy editor of Content Division Three and the head of corporate research at the JoongAng Ilbo. 

One of the most memorable participants at the public briefing on developments in the southwestern region, held on June 30 in the newly established Gwangju–South Jeolla Special Metropolitan City, was Lee Geun-bae, president of Chonnam National University. He said news of the proposed 800 trillion won (about $515 billion) semiconductor project in the Honam region — encompassing Gwangju and the Jeolla provinces — had kept him awake with excitement.

"For the first time, I feel our young people may be able to stay in their hometown, find good jobs and build their lives here," he said.

His optimism reflects Gwangju's reality. According to the National Data Agency, the city recorded the highest net outflow rate of young people aged 19 to 34 among Korea's seven major metropolitan cities last year at 2.5 percent. Its youth employment rate, at 49.9 percent, ranked last among the nation's 17 cities and provinces.

For many Koreans, Gwangju is a city remembered mainly during elections or every May, when the anniversary of the May 18 Gwangju Democratization Movement in 1980 is marked. It has also long been the target of regional prejudice. Although celebrated as the birthplace of Korea's democratic movement, its average monthly wage reached only 92 percent of the national average last year.

Against that backdrop, the announcement of massive semiconductor investment has transformed the local mood. Outside the region, however, critics have questioned why such a project should be located in Honam. At the event, President Lee Jae Myung stressed that the decision reflected business considerations. At the same time, he described it as a historical reward for Honam, which he said had defended democracy despite decades of discrimination.

Whether motivated by regional development or political calculations, the project is undeniably political. Yet major industrial policy in Korea has never been free of politics. The establishment of the Pohang steelworks with funds from Japan's postwar reparations, as well as the concentration of major conglomerates in the Busan, Ulsan and South Gyeongsang region, were also shaped by government decisions. Businesses operate within markets, but governments have always influenced the environment in which those markets function.

Companies ultimately make investment decisions based on market conditions. Both Samsung Electronics and SK hynix may adjust the pace or scale of their investment as demand changes. The more important question is not whether politics played a role in bringing the project to Honam but whether Gwangju has the capacity to support it.

The decisive factor may not be water or electricity, as critics often argue, but whether the city can attract and retain skilled workers. Skeptics have long joked that Pyeongtaek, Gyeonggi, marks the southern limit of Korea's semiconductor labor market. Gwangju must prove that assumption wrong. A project worth hundreds of trillions of won will succeed only if talented people choose not only to work there but also to build their lives there.

Cities that attract talent usually share three strengths: quality education, advanced medical services and a vibrant cultural environment. Jobs bring people, livable communities attract high-value industries and growing populations reinforce both. Whether this cycle becomes virtuous or self-defeating depends largely on local government.

Unfortunately, Gwangju has not always excelled in this area. During this year's local elections, then-candidate and now Mayor Min Hyung-bae proposed relocating the Korea National University of Arts to Gwangju. The proposal illustrated a broader weakness. Although the city received substantial government funding during the Roh Moo-hyun administration to build the Asia Culture Center, it has struggled over the past decade to cultivate the artists, cultural industries and creative ecosystem needed to fully utilize that investment. Rather than developing its own strengths, the relocation proposal suggested that importing institutions from Seoul could solve deeper structural problems.

Gwangju's challenges are not entirely self-inflicted. The region was largely excluded from industrialization during Korea's high-growth era and produced relatively few major business leaders, leaving it with limited manufacturing employment and a comparatively small middle class. Political competition has also been weak in a city where one party has long dominated elections.

Even so, the semiconductor project presents Gwangju with an opportunity to demonstrate that it can transform itself through its own capabilities rather than continued support from the central government. Success will depend less on winning investment than on building the administrative capacity, urban infrastructure and quality of life needed to sustain it. Whether Gwangju is prepared for that challenge is now being watched by the entire nation.