[Column by Koo Bon-young] To Keep Honam Semiconductors from Chasing a Mirage

The plan to build a semiconductor cluster in the Honam region has become a hot issue in politics. President Lee Jae Myung is driving it hard, but the controversy is far from over. Cheong Wa Dae has promised completion within the current term, yet Samsung Electronics and SK hynix, the companies that would actually invest, appear to be reading the market's chilly mood and proceeding cautiously. With the investment scale exceeding 800 trillion won, skepticism about whether the project is truly feasible remains widespread.
On the 29th of last month, President Lee announced the "three major mega-projects" together with Samsung Electronics Chairman Lee Jae-yong and SK Group Chairman Chey Tae-won. The total investment amounts to 4,755 trillion won. That figure includes ongoing projects such as Samsung Electronics' Pyeongtaek and Yongin investments of 2,030 trillion won, and SK hynix's Yongin semiconductor cluster worth 600 trillion won. Among the new projects, the most notable is the semiconductor initiative in the southwest region, covering Jeonnam-Gwangju, where Samsung Electronics and SK hynix plan to invest about 896 trillion won to build memory semiconductor fabs, two each.
As a result, complaints have risen in other regions that feel left out. The Chungcheong Region was promised semiconductor packaging fabs worth about 392 trillion won, and the Yeongnam Region was promised investments in Physical AI and the space industry worth about 312 trillion won. Even so, the sense of relative deprivation in those areas does not seem to be fading easily. In Jeonbuk, the governor even voiced a feeling of exclusion, saying he had expected a semiconductor fab in Saemangeum.
The ruling party appears ready to push through the controversy with the logic of balanced national development. President Lee said it would be "a historic compensation for Honam, which has protected democracy despite years of discrimination and hardship." Of course, claims of discrimination against Honam can be challenged by recent statistics. Still, as the president put it, if one compares "historically accumulated investment levels," the argument that the Honam semiconductor industrial complex serves regional balance has some merit.
Despite opposition backlash that this was a unilateral decision made without examining site conditions in each candidate area, Cheong Wa Dae has declared a rapid push for the Honam semiconductor project. It said, "We will aim for completion within this administration's term and finish the groundwork within two years." But questions remain. The ruling party may be able to force through the first shovel with its overwhelming parliamentary majority, but it is unclear whether the project can actually begin operations before the term ends.
Above all, the biggest variable is that the three mega-projects are led by private companies. That makes them different from state-budget-driven projects such as the Gyeongbu Expressway and POSCO, built with reparations funds under the Park Chung-hee administration, or the construction of Sejong City under the Roh Moo-hyun administration and the Four Major Rivers Restoration Project under the Lee Myung-bak administration. For now, Samsung Electronics and SK hynix are enjoying a strong investment capacity thanks to the semiconductor supercycle. But a cycle by definition means a downturn will eventually come. Goldman Sachs and others have warned that the memory chip market could enter an "oversupply" phase by 2027.
For companies, then, long-term large-scale investment is a gamble. It is a task that would be difficult even if the central and local governments took responsibility for the four key foundations: power, water, land and labor. That is why the leadership of both Samsung Electronics and SK Group has stressed that infrastructure and support must come first rather than setting a specific investment timetable. In semiconductor manufacturing, high-quality electricity that cannot be interrupted for even one second and "ultrapure water" for countless cleaning processes are essential. That is why power and water are core infrastructure for the semiconductor industry. I felt this firsthand during a Kwanhun Club visit to SK hynix's Icheon plant in April. The massive factory, as tall as a 38-story apartment building at 105 meters, was running 24 hours a day on stable power. We were also told that water drawn from upstream of the Namhan River's Yeoju Weir was sufficient for fab operations.
By contrast, the southwest region is weak in both forms of infrastructure compared with the Seoul metropolitan area and other regions. At first, Cheong Wa Dae pointed to Jeonnam's abundant solar and wind power as the basis for electricity. But the intermittent nature of renewable energy, depending on day, night and weather, is fatal for the semiconductor industry. The Yeongsan River basin also has less water and higher turbidity than the Han River or Nakdong River basins, making it a poor location in terms of water supply.
In that context, former Daegu Metropolitan City Mayor Hong Joon-pyo hit the mark. He said that "small modular reactors (SMRs) and dam construction are needed to solve the power and water shortages for Honam semiconductor fabs." Whatever the truth may be behind the recent rumors involving him and the ruling party, his advice itself deserves attention. This is not an easy task, because it would amount to changing the ruling party's DNA, much like abandoning nuclear power. In particular, many senior figures in the ruling camp have dismissed the Four Major Rivers Restoration Project, whose stated goals were flood prevention and water resource security, as a "mass deception of the public."
What if the ruling party continues to treat nuclear power plants and dams as if they were noxious facilities, while trying to draw electricity and water from other regions where such facilities are located? It could face a nationwide backlash in the next general election, and Honam semiconductors may end up as nothing more than a "paper fab." If the Honam semiconductor cluster is not to become a mirage, the government must take the first step honestly. That means drawing up a concrete roadmap and firmly taking charge of building the power and water infrastructure in the southwest from the outset.
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