SEOUL, June 23 (AJP) - South Korea's memory giants Samsung Electronics and SK hynix, both based in the capital region, are moving south to build new fabs as their semiconductor campuses in Gyeonggi Province have little room left for expansion to meet explosive demand in the AI era.
The southward pivot by the Korean chipmakers coincides with the government's push to ease concentration around Seoul and cultivate the southern coast, rich in renewable energy resources, into a new hub for AI, semiconductors and data centers.
The vision is expected to be unveiled at a conference hosted by President Lee Jae Myung on June 29, attended by senior cabinet ministers and business leaders including Samsung Electronics Vice Chairman Jun Young-hyun and SK hynix CEO Kwak Noh-jung.
Samsung and SK Group are expected to hold separate briefings to outline their new investment plans.
SK Group Chairman Chey Tae-won is expected to announce a detailed blueprint on June 30 for a semiconductor cluster in Gwangju that will include large-scale front-end fabrication facilities. Samsung Electronics is also preparing a mid- to long-term fab construction plan in the region.
On July 2, Samsung Electronics Chairman Lee Jae-yong is expected to unveil plans for what would become the country's largest AI data center in Asan, South Chungcheong Province, with SK Group joining the project to build a comprehensive AI ecosystem.
The massive capacity expansion comes amid a severe memory shortage driven by the artificial intelligence boom. Global memory market revenue is projected to surge 163.1 percent from a year earlier to $594.7 billion this year, prompting technology giants and hyperscalers to secure long-term supply contracts.
The strategic shift to the southern regions comes as existing semiconductor hubs in the Gyeonggi Province—namely Yongin, Pyeongtaek, and Icheon—are rapidly approaching their maximum operational capacity. Expanding these capital-area facilities faces mounting challenges, including astronomical land acquisition costs, stringent regional regulations, and severe bottlenecks in securing additional power grids and industrial water supply.
To circumvent these logistical hurdles and manage soaring overhead costs, the chipmakers are heavily decentralizing their operations. Cheonan, located just south of the capital area, is being strategically fortified as a specialized hub for advanced packaging. This process is increasingly critical for producing next-generation AI components, such as high-bandwidth memory (HBM) chips, which require complex vertical stacking of multiple DRAM layers.
Meanwhile, Gwangju is being spotlighted as the ultimate greenfield destination. It offers a direct solution to the capital region's capacity crunch by providing relatively lower infrastructure costs and a vast availability of industrial land. Furthermore, its access to abundant renewable energy resources is essential for the tech giants' RE100 commitments, aligning perfectly with the government's broader strategy to build a southern semiconductor packaging belt.
The initiative also reflects a growing convergence between semiconductor manufacturing and AI infrastructure, as both advanced fabs and data centers require vast amounts of electricity and stable energy supplies.
Still, the ambitious regional strategy faces significant hurdles.
Industry insiders have voiced concerns that government-led site selection could compromise operational efficiency in an increasingly fierce global chip race.
Building a fab on a greenfield site also requires extensive supporting infrastructure, including power transmission networks, industrial water systems and a deep talent pool.
Experts note that it took six years for the Yongin semiconductor cluster in Gyeonggi Province to prepare for its first fab, which is scheduled to begin operations next year, underscoring the lengthy and complex process of establishing a new semiconductor ecosystem.
Despite the challenges, the projects would mark a significant shift in South Korea's industrial geography, expanding the country's semiconductor footprint beyond the capital region for the first time on a large scale in response to the demands of the AI era.
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