In Dongtan, Semiconductor Boom Fails to Benefit Local Businesses

"My husband made a lot of money this time, so why not buy this?"

At the Lotte Department Store in Dongtan, a sales associate made this unsolicited pitch to a customer. The associate did not mention that the customer had a husband or that he worked for Samsung Electronics. Yet, the phrase "husband who made a lot of money this time" seemed to need no explanation. This is Dongtan.

Dongtan is a prominent "semiconductor city" in South Korea, located near Samsung Electronics' Hwaseong and Giheung semiconductor plants and connected by shuttle bus to SK Hynix's Icheon facility. With an unprecedented boom in AI-driven memory production, Samsung and SK Hynix have reported record earnings, significantly increasing the disposable income of local employees. SK Hynix workers are expected to receive bonuses totaling around 700 million won, while Samsung semiconductor employees are projected to receive bonuses of about 600 million won.

Evidence of this financial influx is visible in various sectors. Sales at Lotte Department Store in Dongtan increased by 25% in the first half of the year, with luxury goods, overseas watches, and jewelry seeing a rise of 40-45%. New registrations of imported cars in Hwaseong surged by 42.5%. Apartment prices in Dongtan have risen by 16.3% this year, marking the highest increase in the country.

However, stepping out of the department store and into the alleyways reveals a stark contrast. A café owner remarked, "We haven't seen an increase in customers." An optical shop reported a decline in sales, and a travel agency stated, "We don't feel the effects of the bonuses." Despite the semiconductor industry experiencing its largest boom, why are local businesses in Dongtan not sharing in the prosperity?

The answer lies in the sheer scale of the bonuses received by semiconductor employees. If bonuses are in the hundreds of thousands of won, they can be spent on dining out and shopping. However, when bonuses reach tens of millions, the narrative changes. The money begins to function as "capital" rather than just a "bonus."

The first signs of this financial shift are evident in the real estate market. According to the Korea Real Estate Agency, apartment prices in Dongtan have surged by 16.3% this year, with jeonse (long-term rental) prices also rising by 10.9%. Ham Young-jin, head of the real estate research lab at Woori Bank, analyzed actual transaction prices from the Ministry of Land, Infrastructure and Transport and found that from June to August 25, 64.6% of the 494 apartment types traded in Dongtan reached record highs during this period, the highest ratio in Gyeonggi Province.

A 97-square-meter unit in Cheonggye-dong The Sharp Central City sold for 2.16 billion won, exceeding the previous record by 500 million won. A 128-square-meter unit in Dongtan Station Hanwha Dream Green Prestige also changed hands for 2.4 billion won, up 420 million won from the previous record.

The pace of rising home prices has outstripped the bonuses received by some employees.

A Samsung Electronics employee, who wished to remain anonymous, said, "I was looking to move to Dongtan after receiving my bonus, but prices have risen so much that now I can't even dream of it."

Even within Dongtan, the flow of money varies. A real estate agent in Dongtan 1 New Town noted, "There are many Samsung Electronics employees nearby, but we don't feel a significant impact here. Prices have risen, but Dongtan 2 has seen much larger increases."

Professor Seo Jeong-ryeol from Yeongsan University explained that just because semiconductor employees receive large bonuses, it does not mean they indiscriminately buy nearby homes.

He stated that funds tend to concentrate in areas where proximity to work, living conditions, and investment value converge.

"If conditions are similar, people will naturally prefer areas with better living conditions or higher investment value," he said. "Just because large companies like Samsung or SK Hynix are making money, it doesn't mean employees will buy homes anywhere. Apartments that are close to work and have investment potential take priority."

Additionally, a new financial opportunity will arise next month. Starting September 1, Samsung Electronics will offer housing loans of up to 500 million won at an interest rate of 1.5% per year to eligible employees without homes. This will apply to properties valued at 2.5 billion won or less and with a floor area of 85 square meters or less in the metropolitan area.

As expectations for price increases grow, some existing contracts are being canceled. A Dongtan resident, Mr. Kim, reported that he received an unexpected notice of contract termination from the landlord of an apartment he was set to move into. "The landlord deposited double the deposit without any explanation. I think they believe prices will rise further." Professor Seo explained that a landlord canceling a contract while offering double the deposit indicates a belief that the future increase in home prices will outweigh the cost.

However, just a few blocks away from the apartment complexes, the atmosphere changes. An optical shop employee stated, "When asked if the local economy has improved, I would say no. They say bonuses have been issued, but sales have not increased; in fact, they have decreased." He observed that young professionals seem more interested in other investments. "It seems like they are investing a lot in stocks and are also very interested in real estate."

A café owner had high hopes when Samsung's performance began to soar. "Honestly, we thought we would benefit. When Samsung issues bonuses, we thought money would circulate in the area." However, customer numbers did not increase as expected. In previous boom periods, corporate orders for snacks and meals would flow into local businesses, but this time, many local merchants are reporting that "business is tough."

The café owner reflected on his own spending habits to explain the situation. "If I suddenly came into a lot of money, I would probably move or pay off debts first. Shopping doesn't leave anything behind, does it?"

Shopping patterns have also changed with the size of expenditures. Sales at Lotte Department Store in Dongtan increased by 25% in the first half of the year, surpassing the overall growth rate of about 20% for all Lotte stores. Notably, sales of luxury goods and overseas brand watches and jewelry surged by 40-45%.

The automotive sector has seen similar trends. According to the Korea Automobile Importers and Distributors Association (KAIDA), new registrations of imported cars in Hwaseong, where Dongtan and Samsung Electronics' Hwaseong plant are located, increased by 42.5% in the first half of the year, rising to 4,273 from 2,998 in the same period last year. The national increase rate during the same period was 33.2%. While it cannot be definitively stated that Samsung's bonuses directly caused the increase in imported cars, employees' spending plans do include vehicles. A Samsung employee, Mr. Lee, said, "I have wanted to change my car for a while, and I am considering doing it now."

Tracking the flow of money in travel is more challenging. A travel agency in Dongtan reported that despite the semiconductor bonuses, there has not been a noticeable increase in bookings. "Corporate employees often use travel agencies affiliated with their companies. Even for the same products, they tend to use those agencies to receive employee discounts." Young employees also book flights and accommodations directly through applications. Money may be flowing overseas, but it is simply not passing through local travel agencies.

In fact, an educator in Dongtan noted a significant increase in students missing classes due to travel this summer. "In the past, a family would typically take a 3-4 day trip abroad during vacation. This time, however, families are going on multiple trips, such as visiting Vietnam and then returning to Japan during the same break." However, these families have not doubled their education expenses.

Lee Eun-hee, an emeritus professor of consumer studies at Inha University, explained that large sums like bonuses are spent differently than regular salaries. High-priority expenses, such as education, do not suddenly increase just because unexpected money comes in. Instead, unanticipated funds are often used to expand living spaces, accumulate assets, or enable purchases that are typically difficult to make with regular salaries. She noted that money may flow toward travel, luxury goods, and imported cars—things people want but find hard to afford normally.

Professor Yang Jun-mo from Yonsei University simplified this concept further. "You don't eat two meals, and a child already attending an academy isn't going to pay double the tuition." The moment bonuses reach tens of millions of won, the nature of the money itself changes.

Professor Yang explained, "For example, if you suddenly receive 600 million won, you will start to consider whether to buy a home in Dongtan or add more money to move to Gangnam. At that point, the logic of money changes completely." He noted that during past export booms, money earned in prosperous regions did not all get spent locally; instead, it often shifted toward higher-value real estate or financial assets. "When a large sum of money suddenly appears, it transitions into the concept of asset investment."

The semiconductor factories are thriving, and employees are enjoying increased financial security. Apartment prices in Dongtan are reaching new highs, and luxury sales and imported car registrations are soaring. Yet, the cash registers in the alleyways outside the apartment complexes remain quiet.

The money generated by the semiconductor industry that sustains Dongtan has not been distributed evenly throughout the community. Rather, it has flowed in different directions.

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