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. This initiative aims to distribute semiconductor investments and infrastructure, which have been concentrated in the Seoul metropolitan area, to promote balanced national development and enhance industrial competitiveness.
According to industry sources on June 17, both companies are exploring locations for semiconductor plants in Honam, with Samsung 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 the first time Samsung has established semiconductor production facilities in the Honam region, and SK Hynix is also seeking to expand its investments beyond its current focus on the Seoul 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. While 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 to promote balanced national development. The recent surge in demand for AI semiconductors has heightened the need for expanded production facilities, as the power and water supply capabilities in the Seoul area are nearing their limits.
For instance, the power self-sufficiency rate in Gyeonggi Province is below 60%, while South Jeolla Province is recognized as the largest renewable energy production area in the country. With a concentration of solar and offshore wind power facilities, the region is well-positioned to meet future RE100 (100% renewable energy) requirements and secure energy supply.
There is also significant optimism about fostering a regional industrial ecosystem. Gwangju is home to Amkor Technology, a semiconductor packaging company, 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 further investments from equipment and materials suppliers, positioning Honam as a new pillar of South Korea's semiconductor industry.
However, prevailing views suggest that this investment will not replace the existing semiconductor cluster in the Seoul area. The factories under consideration by both companies are focused on packaging, which is a post-processing stage, rather than the front-end manufacturing that involves etching advanced circuits onto wafers.
The front-end process requires close integration of research and development organizations, production lines, and equipment manufacturers, making it difficult to move away from the Seoul cluster. In contrast, packaging processes have fewer location constraints and lower energy burdens, allowing for regional distribution. Major semiconductor powerhouses like the United States and Taiwan also concentrate core research and development and front-end manufacturing in specific clusters while adopting regional distribution strategies for post-processing 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. From a corporate perspective, it is a realistic option to maintain competitiveness while expanding regional investments."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.