Power, water needs test South Korea’s push to build AI chip hub beyond Seoul

South Korea aims to establish a major artificial intelligence chip hub in its southwestern region within four years, a project central to President Lee Jae Myung's strategy to distribute the economic benefits of the AI boom beyond the Seoul metropolitan area. The ambitious Honam semiconductor industrial complex is projected to cost at least 800 trillion won (S$698 billion).

However, the project confronts substantial local opposition, primarily centered on its enormous power and water demands. Companies involved, including Samsung Electronics, will require significant new energy sources to power the planned chip fabrication plants. Analysts estimate that the power demand from these four plants alone could account for 70% to 80% of the current annual electricity consumption in the southwestern regions of Gwangju, North Jeolla, and South Jeolla.

Local residents have voiced strong opposition to plans for new transmission lines and nuclear reactors, citing dissatisfaction with existing energy infrastructure. Concerns have also been raised about plans to raise an existing dam to supply water to the complex, with residents stating they were not adequately consulted. Neal Won, principal analyst at S&P Global Energy, highlighted the core problem: "A huge amount of new power demand is coming into a region that previously had little."

Experts warn that without accelerated infrastructure expansion, operating the complex at full capacity by 2030 will be challenging. While South Korea's energy ministry suggests the region has sufficient power generation, potential opposition to long-distance transmission lines remains a hurdle. The ministry plans to work with local governments to improve infrastructure and public acceptance, potentially including underground lines and considering new nuclear reactors. Past projects in Yongin have already faced delays due to similar power and water issues, underscoring the critical need to address these bottlenecks for the Honam complex to succeed.

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A huge amount of new power demand is coming into a region that previously had little, and that’s the core of the problem.