Samsung, SK Hynix Eye Honam Region for Semiconductor Investment Amidst Energy and Tax Incentives

Samsung Electronics and SK Hynix are reportedly considering significant investments in the Honam region, encompassing Jeolla provinces, for semiconductor manufacturing. This potential expansion includes not only back-end packaging facilities but also front-end fabrication plants, a strategic shift driven by the pursuit of optimal infrastructure and energy supply amidst a booming semiconductor market.

The Honam region offers distinct advantages, notably its extensive renewable energy resources, which can ease power supply concerns and help meet the growing demand for green energy from global tech companies mandating RE100 (Renewable Energy 100%). Furthermore, the South Korean government is proposing substantial incentives, including up to a 100% reduction in costs for essential infrastructure like power grids and roads, and reduced fees for using state-owned land for semiconductor clusters.

This strategic consideration aligns with the government's national balanced development strategy, particularly the "5-hub, 3-specialty" plan aimed at creating a "southern semiconductor innovation belt." Major investments from Samsung and SK Hynix would significantly bolster this initiative. Samsung's substantial 360 trillion won investment in the Yongin semiconductor cluster faces delays in land compensation, potentially freeing up capacity for relocation, while SK Hynix is already operating fabs in Yongin and plans to begin operations in new ones next year.

The potential for front-end fab investment in the Honam region has been a long-standing request from local governments. Provincial Governor Kim Young-rok has advocated for the region as an ideal location for front-end fabs due to the need for large-scale power and water resources. The move could also attract related industries, including materials, components, and equipment suppliers, fostering a comprehensive semiconductor ecosystem and creating numerous jobs, though challenges remain in building an R&D environment and attracting specialized talent.