Local governments nationwide are abuzz over word that Samsung Electronics and SK hynix are reviewing the creation of a semiconductor cluster in the Honam region. There is consensus on the need to expand advanced industry jobs outside the capital area for balanced regional development, but concerns are also growing that concentrating large-scale industrial infrastructure in a specific area could create another regional imbalance.
The government and political circles are reviewing a new semiconductor investment plan for the Honam and Chungcheong regions, and some expect concrete contours to emerge at a public-private joint meeting on the 29th.
◇ TK: "No political logic"... Gangwon and the Busan-Ulsan-South Gyeongsang area also push back
The strongest reaction came from Daegu-North Gyeongsang. People Power Party lawmakers from Daegu-North Gyeongsang pushed back against cluster discussions centered on the Honam and Chungcheong regions, saying semiconductor industrial policy should not be swayed by political logic. They argued that although Daegu-North Gyeongsang has a base in semiconductor materials, parts and equipment, related talent, and research capacity, it is being pushed down the list in the government's discussions.
Gumi City even put forward extraordinary terms. Gumi Mayor Kim Jang-ho said the previous day that if semiconductor corporations move in, the city would provide land at 1,000 won per pyeong. With Gumi National Industrial Complex, where semiconductor materials, parts and equipment corporations are clustered, as its strength, the intent is that the production base should also be located in Daegu-North Gyeongsang.
The Daegu-North Gyeongsang business community also lent support. The Daegu Chamber of Commerce and Industry and the North Gyeongsang Council of Chambers of Commerce and Industry issued a joint statement the same day saying, while they agree with the policy direction of dispersing capital-area advanced industries to the regions, placing them only in some non-capital regions would cause another form of regional polarization. They added that the top priority in selecting a semiconductor cluster site should be objective and rational criteria such as power, water, land, logistics infrastructure, and specialized personnel.
There is no small amount of dissatisfaction in the Gangwon area as well. Gangwon has been pushing to enter the semiconductor ecosystem by promoting a semiconductor training center, a test bed, and nurturing advanced industries linked to medical and bio. It has touted proximity to the capital area, large industrial sites, and relatively low land prices as strengths, but there is concern that if major investment discussions flow toward Honam and Chungcheong, plans to nurture regional strategic industries could lose momentum.
A similar undercurrent is detected in Busan, Ulsan and South Gyeongsang. The area has a manufacturing base in power equipment, automobiles, shipbuilding and machinery, as well as semiconductor demand industries. There had been expectations that locating semiconductor production facilities there could advance industries in tandem with existing manufacturing, but as the area's name was left out of the latest discussions, a sense of relative deprivation is growing. In the North Jeolla region, some are calling for dispersed creation of a semiconductor cluster by using the Saemangeum site.
◇ Honam's strengths are renewable energy and sites... water and talent remain challenges
Honam is seen as having locational competitiveness because it has abundant renewable energy infrastructure such as solar and wind power and relatively ample land needed to build industrial complexes. Expanding the advanced-industry map concentrated in the capital area to the southwest could also yield significant balanced-development effects.
However, the semiconductor industry has a high bar for site selection. Large-scale power and water, specialized talent, concentration of partner firms, logistics networks, and permitting speed must all align. Although the Honam region has built a renewable-energy base, solar and wind power output is highly volatile depending on the weather. Given that 24-hour stable power supply is essential for semiconductor plants, some note that complementary power sources such as energy storage systems (ESS) and LNG power must be secured together.
Securing water is also an issue. Semiconductor fabs require massive amounts of water for wafer cleaning and ultra-pure water production. According to industry sources, a single cutting-edge semiconductor plant uses an average of 20,000 to 30,000 tons of water per day. If a large cluster is built, a stable daily supply of several hundred thousand tons or more will be needed.
The main water sources in the Honam region are the Yeongsan River and the Seomjin River. The Yeongsan has abundant volume but is said to have limitations for industrial water use due to water quality issues, while the Seomjin's water quality is relatively good but its basin area is small. Frequent spring droughts are another burden. In 2022, the storage rate at Hwasun Dongbok Dam, Gwangju's water source, fell sharply, raising the possibility of water rationing.
Securing talent is also a tough task. Running a semiconductor fab requires master's and doctoral-level engineers and skilled workers, but reluctance toward working in the regions remains strong. It is also a burden that there are not many corporations with a semiconductor industrial base in Honam.
An official at a semiconductor corporation said the semiconductor industry does not operate with just one large company; agglomeration with materials, parts and equipment partners is crucial.
◇ Government: "Polycentric strategic industries"... dividing up roles is key
The government is wary of widening regional conflict. President Lee Jae-myung said it is necessary to pursue "polycentric strategic industries," building an industrial base outside the capital and expanding investment in core advanced industries to Yeongnam, Chungcheong, Gangwon, Jeju and Honam. The intent is not to grant favors to a particular region, but to ease concentration in the capital area and broaden the national industrial map.
Samsung Electronics and SK hynix are expected to unveil regional investment plans, including a Honam semiconductor cluster, at a public-private joint meeting on a "great transformation of national space" presided over by the president on the 29th. Presidential Chief of Staff for Policy Kim Yong-beom said in a broadcast interview on the 26th that the event will explain programs created through efforts by the government and corporations in three areas—semiconductors, physical AI and robots—and that specific investment plans will be disclosed.
Lee Byung-hoon, a professor in the Department of Electrical and Electronic Engineering at Pohang University of Science and Technology POSTECH, said that as domestic semiconductor facilities have reached saturation, the need for expansion is growing, and that the Honam cluster discussion should not turn into a zero-sum competition between regions. He added that corporations should decide the optimal location after considering multiple factors, but cautioned against splitting production sites into equal n-ths by division simply to consider regional distribution in the site discussion process.