The vision for a semiconductor cluster in the southwestern region of South Korea has become a reality as the government, Samsung Electronics, and SK Hynix announced plans to establish semiconductor production bases in South Jeolla Province and Gwangju.

With a stable energy supply, an artificial intelligence (AI) industrial foundation, and a combination of government incentives and corporate support systems, the Jeonnam-Gwangju region is expected to grow into a new pillar of the semiconductor industry, which has historically been concentrated in the Seoul metropolitan area.

The government announced today (the 29th) that it will build a second semiconductor production base, following the one in the capital region, in the newly formed Jeonnam-Gwangju Integrated Special City.

Samsung Electronics and SK Hynix plan to invest a total of 800 trillion won to construct four semiconductor memory fabs (factories), with two to be built by each company.

In today's announcement by the government and the companies, specific factory sites were not identified. Samsung Electronics Chairman Lee Jae-yong mentioned Gwangju as a candidate site, while SK Group Chairman Chey Tae-won referred to the southwestern region.

The planned factory sites are expected to be unveiled at the Southwest Region Investment Plan National Report Meeting, hosted by the Ministry of Trade, Industry and Energy, which will be held in Gwangju tomorrow (the 30th).

The government announced today that it will take responsibility for infrastructure such as electricity and water supply, and will cooperate with local governments to support the entire process from licensing and site acquisition to the start of construction.

The Jeonnam-Gwangju region is considered to have several strengths that can foster the growth of the semiconductor industry.

As semiconductor factories are industries that consume massive amounts of electricity, a stable power supply is considered the most important competitive factor for a location.

South Jeolla Province is capable of providing a stable power supply as it possesses the Hanbit Nuclear Power Plant and the nation's largest renewable energy generation complexes, including solar and offshore wind power.

In particular, its status as having one of the largest renewable energy bases in the country, capable of realizing RE100 (100% renewable energy) as demanded by global companies, is its greatest competitive edge.

Gwangju has built an AI industrial foundation centered around high-tech industrial complexes that house the National AI Cluster and the National AI Data Center.

In addition, Amkor Technology Korea, a world-class semiconductor packaging (back-end process) company, operates a factory in Gwangju, making the concentration of advanced packaging possible as well.

The plan of the government, companies, and local governments is to build a semiconductor ecosystem that connects Gwangju's AI industrial foundation and South Jeolla Province's energy and manufacturing base into a single industrial belt within the Jeonnam-Gwangju Integrated Special City, which will be launched through the administrative integration of the two regions this coming July.


If the attraction of semiconductor fabs becomes a reality, the economic impact is expected to be significant.

The semiconductor industry is evaluated as having a large ripple effect on the local economy because it is a structure in which hundreds of partner companies grow together, not just the production facilities.

Beyond the massive private investment made during the factory construction process, ripple effects are expected in forward and backward industries, including direct employment for factory operations, materials, parts, and equipment (so-bu-jang), and logistics.

The large-scale relocation of materials, parts, and equipment companies could also serve as a powerful engine driving the technological transformation and advancement of the local automotive and energy industries.

Large amounts of capital will be injected into the region for land compensation and construction costs, and the revitalization of the local economy is also expected through increases in corporate and local income taxes.

Semiconductor production factories cannot operate without a stable power supply.

In a situation where the burden on the power grid has increased due to the expansion of AI demand, such as the increase in AI data centers, the expansion of the regional power grid is absolutely necessary.

Semiconductor processes also require high-quality water and wastewater treatment systems, so water and logistics issues must also be resolved.

Accessibility to ports, airports, and expressways for the movement of finished products, materials, and equipment is also important.

To induce corporate relocation or new investment in the provinces, support from the government and local governments, such as investment tax credits, local tax exemptions, support for site development costs, and the shortening of licensing procedures, is also essential.

A training system for practical semiconductor talent that can be deployed immediately must also be in place for the region to realize the effects expected from the creation of the semiconductor belt.

An official from Gwangju City said, "Companies can only move if local governments offer a package that goes beyond just providing land," adding, "We will establish a one-stop corporate support system and form a dedicated team for companies to ensure that electricity and water supply and licensing procedures can be pushed forward quickly for the start of semiconductor factory construction."

(Photo: Blue House Press Corps, Yonhap News)