The easiest step is over: Announcing the Honam semiconductor project

Ko Jung-ae

The author is the editor-in-chief at the JoongAng Sunday. 

The numbers were staggering even after Kim Yong-beom, the chief presidential policy secretary, warned that they might “seem unfamiliar.”

Last November, Samsung Electronics and SK Group announced plans to invest 450 trillion won ($289.9 billion) and 600 trillion won, respectively, to ease concerns regarding a domestic investment vacuum. Seven months later, on Monday, the government presented a figure of 4.7 quadrillion won. Samsung’s share alone came to 2.655 quadrillion won, equivalent to maintaining this year’s record investment level of 110 trillion won for 24 years. It was a memory chip rush on an unprecedented scale.

President Lee Jae Myung emphasized that the decision was made “by the companies themselves.” The remark brought to mind the Gwangju-type jobs initiative.

According to a 2024 report by the National Assembly Futures Institute, discussions about better jobs began among labor groups in Gwangju in 2014 before finding their way into then-presidential candidate Moon Jae-in’s 2017 campaign pledge. But the related plan lost momentum during the mayoral primary between then-Mayor Yoon Jang-hyun and his successor Lee Yong-seop because it came to be seen as Yoon’s project.

It was revived ahead of the local elections because the Blue House saw it as part of its election strategy. The report says that the Blue House “twisted Hyundai Motor’s arm” to make the company join the initiative. It also says that the office, driven by its own needs and pulled along by Hyundai’s strategy, wanted Gwangju to accept low-wage jobs with few labor rights. Meanwhile, Hyundai received benefits, including movement on its long-delayed headquarters project in Samseong-dong, southern Seoul.

The issues differ this time: Labor-management relations now center on job location and incentives, and the scale is far larger. Still, both cases involve a government-level drive and an electoral backdrop, including a race within the ruling party.

This time, the presidential office again offered incentives to two companies reluctant to go to Honam, which encompasses Gwangju, North Jeolla and South Jeolla. The most notable involved the Yongin semiconductor cluster. Until recently, critics argued that the administration had sabotaged Yongin. Reform Party leader Lee Jun-seok said that the government disrupted procedures for transmission lines to Yongin last month to preserve its claim that “there is no electricity in the Seoul metropolitan area.” He also said that a key consultative body had been closed for seven months. President Lee has now promised to complete the planned sites and fabrication plants quickly.

But can a Honam semiconductor hub actually happen?

Presidential chief of staff Kang Hoon-sik said that the government would “take on the challenge” of completing it within the president’s term, which ends in June 2030. That leaves four years.

The industry appears to have a different timetable. One person familiar with the matter said that Gwangju and South Jeolla seem to believe they can provide electricity, water, living conditions and enormous incentives.

“We also needed a post-Yongin plan, so the idea was that if the support is exceptional and the conditions are prepared, we might be able to go [to the region],” the person said.

Samsung Electronics’ response also suggested caution. On Monday, the company revised a regulatory filing after just 40 minutes, adding that the plan could change depending on future market conditions and its business environment. The government appears to envision Yongin and Honam moving in parallel, while companies appear to be thinking Yongin first. The government is speaking in the indicative mood, but businesses are speaking in the conditional.

Closing that gap will depend on the ruling bloc’s will, competence and luck. Questions raised by Park Soo-min, a People Power Party lawmaker and former government official, are only the basics. If dams or weirs are needed for water supply, will the Democratic Party reverse its opposition to the Four Major Rivers Project? If chips and data centers require nuclear power, can it persuade antinuclear forces in Honam? Has it prepared plans for schools and hospitals that would allow talent to settle there? Will the party now seek to establish specialized high schools and private hospitals? All of this would require the Democratic Party to change its soul.

Another question remains. Will the semiconductor cycle last? Perhaps what we have seen is the easiest stage of the journey toward Honam semiconductors: the announcement.