Let chipmakers choose plant locations

Plans to build semiconductor facilities in the Honam region appear to be under review. Reports say that Samsung Electronics is considering a semiconductor packaging plant in Gwangju. Packaging plants, which inspect and assemble chips into final products, generally require less electricity, water and construction than fabrication facilities, where wafers are produced and circuits etched. As a result, when expanding investment into new regions, packaging plants are often viewed as carrying a lower burden. SK hynix is also reportedly considering additional investment in either the Honam or Chungcheong region.

Since last year, regional politicians have called for semiconductor facilities concentrated in the Seoul metropolitan area to be relocated to other parts of the country. Many candidates in this month’s local elections also pledged to attract semiconductor plants to their respective areas. At a meeting between President Lee Jae Myung and the heads of major business groups scheduled for later this month, companies may unveil more detailed plans for regional investment.

There is no doubt that investment by large corporations outside the capital region can help promote balanced national development. It can spread high-quality jobs beyond the metropolitan area and provide a boost to local economies that have struggled with population decline and weak growth.

But there is also a risk in relying too heavily on the cause of regional revitalization. Corporate investment strategies should ultimately be determined by business viability and market prospects. Excessive emphasis on policy goals could distort those decisions.

At a news conference marking the first anniversary of his inauguration on Monday, Lee said that he would soon announce a large-scale investment project aimed at fundamentally reshaping the country’s growth strategy. Stressing the importance of regional investment by major companies, the president said that the government will ask businesses to consider locating projects outside the capital region and offer support in return.

He added, partly in jest, that he will apply “a little pressure” while remaining within legal boundaries. Although the remark was made humorously, companies that are well aware of the government’s preferences may not have interpreted those words lightly.

The current semiconductor boom will not last forever. Competitor economies such as Taiwan continue to concentrate investment in established semiconductor clusters where electricity, water and skilled workers are readily available. Korea must ensure that efforts to encourage regional investment do not weaken the competitiveness of its semiconductor industry.

To avoid that outcome, the government should create an environment in which companies can make investment decisions according to their own principles and assessments. Even a small amount of pressure from the government can discourage businesses from exercising independent judgment.