The Yeongnam region has been allocated a substantial investment of 270 trillion won as part of the government's three major mega-projects, yet it lacks direct semiconductor investments. Instead, more than half of the total investment is directed toward AI data centers (AIDC). The placement of energy-intensive data centers in Yeongnam, which is equipped with power, water, and airport infrastructure, is expected to spark controversy over industrial distribution criteria.
On July 3, President Lee Jae-myung chaired the "National Report Meeting on Advanced Industrial Development in Yeongnam" in Jinju, South Gyeongsang Province. This event follows the announcement of the Republic of Korea's three mega-projects on June 29 and is the third regional report meeting, following those for the southwestern and Chungcheong regions.
According to the Blue House, the total investment in the Yeongnam region is tentatively set at 270 trillion won. This includes 146 trillion won for AIDC, 13 trillion won for physical AI, and 111 trillion won for other industries such as automotive, shipbuilding, aerospace, and energy.
Industry experts are highlighting the absence of semiconductor investments in the Yeongnam region's plans. The government previously announced plans for four semiconductor fabs worth 800 trillion won in the southwestern region, with an 81 trillion won plan for advanced packaging in the Chungcheong region. In contrast, the Yeongnam investment plan does not include new semiconductor production fabs or advanced packaging facilities.
Critics argue that it is unclear why the Yeongnam region, which meets key conditions for semiconductor placement—such as power, water, and transportation networks—has been excluded. The region is equipped with the power grid from the East Coast nuclear power plants, the Nakdong River watershed, and a manufacturing base in cities like Gumi, Ulsan, Changwon, and Busan. It also has logistics infrastructure, including Gimhae Airport, Daegu-Gyeongbuk New Airport, and Busan and Ulsan ports.
Gumi, in particular, is already designated as a semiconductor-specialized area, housing semiconductor materials and parts companies within the Gumi National Industrial Complex, with access to the Nakdong River watershed and the Daegu-Gyeongbuk transportation network. Industry analysts suggest that Gumi could have been considered as a hub for packaging, materials, parts, and testing, even if it did not host a semiconductor production fab.
Concerns have also been raised regarding the rationale for excluding Yeongnam compared to the southwestern fab plans. Large semiconductor fabs require significant amounts of power and industrial water. The four fabs planned for the southwestern region are estimated to need over 6GW of power and 650,000 tons of industrial water daily by 2034. If power and water are critical factors, the government should clarify why the Yeongnam region, with its nuclear power and Nakdong River resources, is omitted from semiconductor investment plans.
There are also criticisms that the Yeongnam investment is overly concentrated on AIDC. While AIDC is essential infrastructure for the AI era, it is viewed as a facility to be avoided by local residents due to its high demand for power and cooling systems, as well as potential conflicts over power grid expansion, cooling infrastructure, and environmental impacts. Unlike semiconductor fabs or packaging plants, which can foster collaboration and job creation, the benefits of AIDC are seen as limited.
Industry insiders suggest that while the government presents AIDC as a large-scale investment, local residents may perceive it as a "not-in-my-backyard" facility. Data centers consume significant power and can lead to conflicts over the need for expanded power grids, cooling infrastructure, and environmental concerns. Given that 146 trillion won of the 270 trillion won allocated to the Yeongnam region is focused on AIDC, it is difficult to compare this directly to investments in semiconductor production bases or advanced packaging hubs.
There are also assessments that the Yeongnam investment remains limited to the advancement of existing manufacturing industries. The 111 trillion won allocated for other industries, including automotive, shipbuilding, aerospace, and energy, strongly emphasizes the integration of AI with Yeongnam's traditional industries. Analysts note that unlike the southwestern region, which secured a new semiconductor production network, and the Chungcheong region, which gained a key packaging process for the HBM era, Yeongnam's role has been confined to data centers and the enhancement of existing industries.
As a result of this meeting, observers predict that criticism will grow regarding President Lee's focus on directing semiconductor investments disproportionately toward Jeonnam and Gwangju under the guise of regional balanced development.
An industry source stated, "Yeongnam is a region equipped with power, water, transportation, and a manufacturing ecosystem. With semiconductor production and packaging investments absent, and AIDC presented as a large-scale investment, the government needs to provide a more detailed explanation of its criteria for industrial distribution by region."
* This article has been translated by AI.
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