Honam region stagnates as semiconductor boom drives South Korea's regional growth

South Korea's regional economies experienced their most robust growth in 17 quarters during the first quarter of 2026, largely propelled by a booming semiconductor industry. The national Gross Regional Domestic Product (GRDP) saw a year-on-year increase of 3.8%, the highest since the fourth quarter of 2021 when the semiconductor market was also in a strong upswing.

The growth was particularly pronounced in areas with established semiconductor clusters. The Seoul metropolitan area recorded a 5.2% growth, and the Chungcheong region saw a 4.2% increase, both surpassing the national average. Within these regions, North Chungcheong Province (Chungbuk) led with a remarkable 13.8% growth, largely due to a 25.8% surge in mining and manufacturing, areas heavily influenced by SK Hynix's Cheongju campus. Gyeonggi Province, a hub for Samsung Electronics and SK Hynix, also saw significant growth in its mining and manufacturing sectors, contributing to its 6.2% regional expansion.

“

The upturn in the petrochemical and shipbuilding industries in this region was not good. In the case of Jeonnam, the temporary shutdown of the nuclear power plants in this area had an impact.

The Daegyeong region, home to specialized zones for semiconductor materials, components, and equipment, also experienced growth, increasing by 2.3%. This was bolstered by Gyeongbuk Province's 8.0% expansion in mining and manufacturing, driven by facilities producing wafers and substrates. Seoul's economy grew by 4.8%, with the service sector expanding by 5.1%, and finance and insurance sectors seeing a double-digit increase of 11.2% due to a surge in stock trading volume.

In stark contrast, the Honam region was the sole area among the five major regions to register zero growth. Its mining and manufacturing sector grew by a mere 0.1%, making it the lowest performing across all regions. Jeonnam Province, in particular, contracted by 0.8%, the largest decline among all provinces, attributed to a downturn in its key industries like petrochemicals and shipbuilding, as well as the temporary shutdown of its nuclear power plants. This divergence highlights the significant impact of the semiconductor boom on regional economic disparities, with areas lacking direct ties to the industry lagging behind.

“

There is a large disparity in regional growth rates in the first quarter, with significant differences between areas with and without semiconductor clusters.