The government and domestic conglomerates including Samsung, SK and Naver said on the 29th they will invest up to 4,700 trillion won to build semiconductor production facilities and artificial intelligence (AI) data centers, focusing on the Honam region. At the "Korea's great leap: three mega projects national briefing" hosted by the Blue House that day, Samsung Electronics, SK, LG Electronics, and GS presented investment plans in three key areas: ▲ semiconductors ▲ physical AI such as AI robots ▲ AI data centers.
The total investment related to semiconductors and AI data centers released by Samsung Electronics, SK hynix and others that day was reported at 4,700 trillion won. By sector, Samsung Electronics and SK hynix will invest 800 trillion won to build new semiconductor fabs (production lines) in the Honam region. The two companies will also spend 81 trillion won to build semiconductor packaging fabs in the Chungcheong region. In addition, they decided to invest about 2,700 trillion won to expand existing semiconductor facilities in Yongin and Pyeongtaek, Gyeonggi Province. Separately, SK, GS and Naver will invest at least 1,000 trillion won going forward to build AI data centers. However, they did not release specific investment timelines or detailed plant sites within the regions.
After news broke that Samsung and SK were considering large-scale semiconductor investments in the Honam region, critics said "a concrete plan must be presented to secure power and water sufficient to run the plants." But the power and water supply plan released that day by the competent ministry, the Ministry of Climate, Energy and Environment, did not include specific details or schedules, drawing criticism that it is vague.
◇ No concrete plans for solar energy storage systems, transmission networks, and more
In a press release released that day, the climate ministry said that to supply the power needed to operate the semiconductor industrial complex in the southwest region, it "will swiftly build connection lines and utilize abundant renewable energy and nuclear power." Regarding AI data centers, it said it "will combine renewable energy, nuclear power and thermal power to supply electricity." It also said it will push to revamp the electricity rate system for AI data centers.
Observers say this does not deviate significantly from the government's existing power supply plans and is unclear on how it will practically secure the power shortage in the southwest region. It is reported that running a single semiconductor fab requires around 1 gigawatt (GW) of power. A single nuclear reactor has a generation capacity of about 1.3 GW.
As of last year, Honam's power generation capacity was about 23.3 GW, more than four times local demand. But about half is solar. Power output surges to as much as 11 GW during daylight hours with abundant sunshine and falls to around 8 GW at night. Large-scale energy storage systems (ESS) are needed to store surplus daytime power and supply it at night, and building facilities to meet the demand of a single GW-class plant costs from several trillion won to tens of trillions of won.
Nor was there a plan to expand 345 kV (kilovolt) large transmission networks to carry electricity from power plants to major consumers such as semiconductor factories. According to the Korea Power Exchange, 12 of the 13 345 kV transmission network sites in the Honam region will face "insufficient capacity" between 2026 and 2030. After 2031, all 13 will be in that state. The climate ministry only said that day it "will disclose information on 345 kV substations in relation to AI data centers."
While the government said it will use nuclear power to secure electricity, it had no plan for how to persuade local public opinion opposed to it. South Jeolla Province has Hanbit Nuclear Power Plant Units 1 through 6 in Yeonggwang. But Unit 1 halted operations after reaching its 40-year design life at the end of last year, and Unit 2 will stop in September. KHNP has applied to the Nuclear Safety and Security Commission for an operating change permit to continue operating and extend the design life of Units 1 and 2 by 10 years. The commission will review equipment life assessment, safety and radiation impacts to decide whether to grant the permit. Units 3 through 6 will reach the end of their design lives sequentially starting in 2034.
◇ "If drought strikes, it will not be easy to use spare capacity or switch agricultural water"
It is reported that a state-of-the-art semiconductor fab requires about 200,000 tons (t) of water per day per plant. If four are built, 800,000 tons per day will be needed.
The seven dam basins of the Yeongsan River and Seomjin River, the core water sources for the Honam region, can supply 3.37 million tons of water per day. But the average contract rate for domestic dam water is over 90%. That means destinations for most of the water to be supplied by dams have already been set.
Regarding water for the semiconductor industrial complex, the climate ministry said it "will swiftly build water conveyance pipelines and utilize multi-purpose dams and alternative water resources." For AI data center water, it only said, "If large-scale data center water demand arises in the future, we will supply it in a timely manner."
Yoon Seok-dae, president of the Korea Water Resources Corporation (K-water), said in a free discussion that day, regarding concerns over industrial water shortages, "By using spare volumes at southwest-region dams, we can secure 400,000 to 500,000 tons per day." He added, "Through adjustment or conversion of dam watersheds for power generation and agriculture held by local governments, more than 300,000 tons can be utilized." He also said, "If necessary, we can reuse wastewater and raise dam heights."
In response, some note that "if a drought occurs, it may not be easy to secure alternative water resources, adjust dam watersheds and use spare capacity, or reallocate agricultural water."
However, the actual usage rate of dam water contracted for agricultural and other uses is lower than the contracted volume, so there is a possibility that idle water could be used as industrial water for semiconductors. Even in that case, the issue remains that local farmers may oppose it.