At the "Korea's great leap: Three mega projects national briefing" hosted by President Lee Jae-myung on the 29th, the president said $800 trillion won would be spent to build semiconductor plants in Honam for Samsung Electronics and SK hynix. But the working-level staff at Samsung Electronics' semiconductor (DS) institutional sector, the actual investing entity, were left puzzled. Executives who have been coordinating capital expenditure plans for the existing Hwaseong campus as well as Pyeongtaek, Yongin, and Taylor, Texas, showed visible signs of dismay at the suddenly introduced variable.
On the 30th, Samsung Electronics' DS institutional sector said publicly that "there is nothing further to share because we have not yet finalized specific plans" regarding the government's announcement. Internally, however, they noted that confusion is mounting over the large-scale investment plan announced without concrete consultations. An executive in Samsung Electronics' memory division said, "Wouldn't we first need to set the broad framework and then draw up and examine investment and operation plans?" adding, "Because it is not an investment directly intended by (Samsung), it will take time."
Some warned that "the most worrying scenario has unfolded." In fact, since January this year, Samsung Electronics has shown a cautious stance toward the idea of investing in Honam semiconductors, which had been gaining traction mainly among politicians and local governments. Another Samsung semiconductor official said, "Since the first quarter of this year, concerns were raised about external calls for Samsung Semiconductors to build a plant in Honam, but we did not expect it to lead to such a large-scale investment announcement."
The reason Samsung Electronics' DS institutional sector is in disarray is that key bases such as Pyeongtaek, Yongin, and Taylor, Texas, where capital expenditures are underway, already exist. Even for those investments, Samsung Electronics has adjusted the timing based on careful market demand, coordination with customers, process transitions and technology development, workforce, and ecosystem building. Given the nature of the semiconductor manufacturing business, investing without considering these factors is highly likely to result in massive losses.
Above all, the most pressing issue is how to allocate human and equipment resources across Samsung Electronics' core bases. First, the Yongin national semiconductor industrial complex has seen the public-private-government consultative body stall for seven months, and even land compensation has not been completed. The Pyeongtaek campus is slated for additional line expansions, and Hwaseong also functions as a core base for research and development (R&D) and production technology personnel. If the new Honam variable is added to this, limited capital expenditures and key personnel will have to be distributed across three or more bases.
The burden on working-level staff grew as the national briefing locked in an investment size nearing 800 trillion won and specified a front-end fab. According to the government's announcement, Honam will host a front-end fab, while packaging (back-end) plants will be located in Cheonan and Onyang, South Chungcheong Province. Wafers made in Gwangju will have to be transported to Gyeonggi and Chungcheong regions for back-end processing. Logistics inefficiencies are inevitable, and the distance to Incheon Airport will also be a factor when shipping finished goods to overseas customers.
The presidential office said soaring memory demand is prompting an acceleration of existing plans. In fact, the goal for SK hynix's fourth plant has moved up from 2044 to 2034, and Samsung Electronics also needs to move up its 2048 plan to 2034–35 by more than a decade, according to the government's logic. But industry voices counter that the memory supercycle is not permanent. As it takes seven to eight years just to build a fab, if the outlook for a post-2027 downturn materializes, there are concerns that market demand itself could be different by the time the Honam plant goes into full operation.
Industry officials expect the investment to weigh heavily on Samsung Electronics and SK hynix's finances and hamper flexibility in technology transitions. An industry source said, "We are already struggling to find people willing to relocate to Yongin and Pyeongtaek, and now we have to allocate personnel to Honam as well. If the memory cycle enters an oversupply phase, they could be saddled with massive losses. There are simply too many risk factors."