Samsung Electronics and SK Hynix are considering establishing semiconductor production bases in the Honam region, signaling a potential shift in South Korea's semiconductor landscape amid a supercycle in the industry. The companies aim to distribute semiconductor investments and infrastructure, currently concentrated in the Seoul metropolitan area, to promote balanced national development and enhance industrial competitiveness.
According to industry sources on June 17, both Samsung and SK Hynix are exploring sites for semiconductor plants in the Honam region. Samsung is considering Gwangju and Saemangeum in North Jeolla Province, while SK Hynix is looking at Gwangju and Muan in South Jeolla Province for advanced semiconductor packaging facilities. This would mark Samsung's first foray into semiconductor production in the Honam area, while SK Hynix is reportedly seeking to expand its investments beyond the metropolitan and Chungcheong regions.
Historically, the benefits of South Korea's semiconductor industry growth have been concentrated in the Seoul area, with significant investments made in Samsung's Pyeongtaek campus, Yongin semiconductor cluster, and SK Hynix's Icheon campus. Although the semiconductor sector has become a cornerstone of the national economy, concerns have been raised about the widening industrial gap between regions.
In this context, investments in the Honam region are seen as a meaningful attempt at promoting balanced national development. The recent surge in demand for AI semiconductors has heightened the need for expanded production facilities, while the power and water supply capabilities in the Seoul area are nearing their limits, further supporting the rationale for regional distribution.
For instance, the power self-sufficiency rate in Gyeonggi Province is below 60%, whereas South Jeolla Province is recognized as the largest renewable energy production area in the country. With concentrated solar and offshore wind power facilities, the region is well-positioned for future RE100 (100% renewable energy) compliance and energy security.
There are also high expectations for fostering a regional industrial ecosystem. Gwangju is already home to semiconductor packaging company Amkor Technology, and the Honam region is accelerating the establishment of industrial complexes and energy infrastructure to attract advanced industries. If investments from Samsung and SK Hynix materialize, it could lead to additional investments from equipment and materials suppliers, positioning the Honam region as a new pillar of South Korea's semiconductor industry.
However, prevailing views suggest that these investments will not replace the existing semiconductor cluster in the Seoul area. The plants under consideration by both companies will focus on packaging, rather than the front-end processes that involve intricate connections between research and development organizations, production lines, and equipment manufacturers, making it difficult to move away from the metropolitan cluster. In contrast, packaging processes have fewer location constraints and lower power burdens, making regional distribution feasible. Major semiconductor nations like the U.S. and Taiwan also concentrate core research and development and front-end processes in specific clusters while adopting regional distribution strategies for back-end production facilities.
An industry insider noted, "While advanced packaging is becoming increasingly important, the burdens associated with regional distribution are relatively smaller compared to front-end processes. For companies, this presents a realistic option to maintain competitiveness while expanding regional investments."
* This article has been translated by AI.
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