Korea's Grand All-In

>> Why Samsung and SK Hynix Are Betting on the Honam Region (Jeollanam-do and Gwangju)
The Korean government will announce today the "Three Major Leap Projects"
Including Samsung Electronics and SK Hynix
Building a "semiconductor cluster" in the Honam region
With a total scale of approximately 2,000 trillion won, close to Korea's annual GDP for 25 years
Samsung plans to build a new semiconductor plant in Gwangju Advanced Technology Zone 3
While SK Hynix is considering sites in Jangseong, Jeollanam-do, and overseas
Located in the southwestern part of Korea, the Honam region
Is primarily based on rice, steel (Gwangyang), petrochemicals (Yeosu), and automobiles (Gwangju)
It is an underdeveloped area with nearly no high-tech industry and a population outflow
Several reasons can be summarized for choosing this location:
> Political Task
The Honam semiconductor cluster is Lee Jae-myung's boldest move to date
And will become the largest industrial project of the "5 Poles and 3 Specials" (5 ultra-wide-area zones, 3 special autonomous provinces) strategy
He hopes to harmonize Korea's ambitions in AI and chips
With his promise to narrow regional disparities and revitalize the economy outside the Seoul metropolitan area
At the same time, Gwangju and Jeollanam-do have traditionally been strongholds of the Democratic Party
"Delivering practical benefits to the constituency" will also help Lee Jae-myung stabilize his position
And keep taxes and jobs within Korea
The best vanguard right now is Lee Jae-yong and Choi Tae-won
> Resource Considerations
Korea's semiconductor production is concentrated
In a corridor about 60 km long within Gyeonggi-do, south of Seoul
Including Samsung's three major campuses in Pyeongtaek, Hwaseong, and Giheung
SK Hynix's Icheon campus and the under-construction Yongin mega-fab
Plus about 2,400 equipment/material/packaging supporting companies
Several ultra-large wafer fabs in Gyeonggi-do
Have already pushed the local power grid, water supply, and hazardous waste treatment to the brink
Adding new fabs can only be done by moving outward
Compared to the capital region, Honam's biggest advantages are abundant land, water, and electricity
And Jeollanam-do has long been preparing for RE100 (renewable energy, solar/offshore wind) — this is the core reason for choosing the southwest
>> But this plan also has aspects worth pondering
As is well known, building advanced wafer fabs requires sophisticated logistics
Deep supplier networks and highly skilled labor
These elements may not be able to expand quickly enough in a new region to meet surging demand
The investment for a semiconductor factory, just one production line, requires trillions of won
Once the decision is made, these costs will become fixed expenditures for decades
SK Hynix estimates that by 2050
The investment for the fourth phase of its Yongin industrial cluster will reach 600 trillion won. Meanwhile, Samsung Electronics has already invested up to 360 trillion won
If additional investment is made in Honam front-end projects, debt could accumulate rapidly in the short term
If the economy enters a downturn, Samsung Electronics and SK Hynix internally worry
That this decision could turn into a "cost bomb" in the future
Even if the plan to advance the Honam industrial cluster is formally established
It will take a long process of 10 to 20 years before it is actually operational
The costs of the current government's decision may ultimately
Be borne by the next generation of management and companies in a downturn
Simultaneously advancing the layout in the Honam region could dilute management's decision-making capacity
This may ultimately be seen as an opportunity cost of missing the chance to invest in next-generation processes
>> But the Korean government's stance is very clear
Although future demand will eventually decline
To capture current demand that far exceeds supply and maintain a supply monopoly advantage
It is necessary to build ultra-high-cost market entry barriers
Earlier and faster than competing countries like China
Now is the time for the entire nation to fully commit
Yoon's Office Policy Chief Kim Yong-bum also emphasized the importance of "speed" on Facebook
To channel the excess liquidity from the semiconductor boom into building the Honam cluster
>> Remember that Korea's semiconductor investment has already been swayed by political factors
The key to watch in the future is
How the government's active push and the companies' cautious attitude
Will coordinate the final investment scale and timeline