South Korea's Semiconductor Ambitions Hindered by Infrastructure Bottlenecks, Korean Media Reports

South Korea is striving to overtake Taiwan in the global semiconductor industry by developing a major semiconductor cluster in the country's southwest. However, a significant hurdle threatens this ambition: the slow pace of infrastructure development, especially concerning power supply.

Recent analysis highlights a stark contrast with Taiwan's approach. When TSMC began constructing its plant in Kumamoto, Japan, the local government established a task force that facilitated the factory's operational readiness within three years. This rapid development involved parallel construction of the factory and essential infrastructure like power, water, and roads.

In contrast, South Korea faces a considerable delay between planning and constructing semiconductor factories and the necessary supporting infrastructure. While building a new wafer fab might take around three years, the planning and construction of the required power transmission lines can take an average of 13 years. This disparity is exemplified by SK Hynix's project in Yongin, where factory construction began years after the initial announcement due to infrastructure delays.

Issues such as lengthy environmental impact assessments, slow land compensation processes, and inter-regional disputes over water supply further exacerbate the problem. These infrastructural bottlenecks are becoming a critical bottleneck, potentially diminishing South Korea's competitiveness in the time-sensitive semiconductor market. This contrasts sharply with China's swift development of power grids and Japan's agile response in Kumamoto, where existing infrastructure was leveraged effectively.

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The semiconductor industry is very time-sensitive. If South Korea's current situation continues, where wafer plant construction takes only 3 years but power transmission lines take 10 years, it could lead to a decline in market competitiveness.