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Samsung, SK Hynix to announce massive facility investments as Korea maps out 2nd chip cluster

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Samsung, SK Hynix to announce massive facility investments as Korea maps out 2nd chip cluster

Samsung, SK Hynix to announce massive facility investments as Korea maps out 2nd chip cluster

The expected new semiconductor hubs in the Honam and Chungcheong regions could add up to five new plants; announcements will likely come on June 29

ByHae-Ryeong Kang, Jae-young Han, Chae-Yeon Kim and Hyung-Kyu Kim

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South Korea’s semiconductor industry is preparing for its biggest geographical reshuffle in decades, with Samsung Electronics Co. and SK Hynix Inc. planning to expand advanced production capacity beyond the Seoul metropolitan area into the country’s southwest and central regions.

The two memory chipmakers – the world’s two largest – are expected to unveil plans for as many as five new facilities spanning both front-end wafer fabrication and advanced packaging operations, according to industry sources on Wednesday.

The investments would mark a strategic shift from the long-standing concentration of semiconductor production around the capital region.

The projects are set to be announced at a government-business meeting at the presidential office on June 29, ahead of the July 1 launch of the newly integrated Gwangju metropolitan administration, sources said.

Kim Yong-beom, the presidential chief of policy, said discussions with the companies and relevant ministries over plant locations are nearing completion.

“Exploding semiconductor demand means facility construction must be accelerated,” the senior government official said at a forum in Seoul on Wednesday. “Talks on where these facilities should be located are in their final stages.”

HONAM EMERGES AS TOP CANDIDATE FOR KOREA’S 2ND CHIP CLUSTER

The planned expansion reflects both surging global demand for memory chips and mounting constraints in the greater Seoul area, where land availability and electricity and water infrastructure are increasingly stretched.

Officials see the Honam region in southwest Korea as an attractive alternative because of its abundant renewable energy resources, including solar and offshore wind power, and the availability of large development sites.

Kim stressed that the new investments would complement rather than replace the massive semiconductor cluster in Yongin, near Seoul, a project already under construction.

“The Yongin cluster must be completed earlier than originally planned, but we also need to prepare for what comes afterward,” he said. “There is simply no additional land in the capital region and securing power and water will become increasingly difficult. We need to identify a second cluster for the next seven to eight years.”

The move also aligns with President Lee Jae Myung’s regional development agenda, which seeks to narrow economic disparities between the capital region and the provinces.

SK HYNIX, SAMSUNG OUTLINE THEIR PROJECTS

SK Hynix is understood to be considering both front-end and back-end facilities in Gwangju, South Jeolla Province, while also reviving plans for a new NAND flash fabrication plant in Cheongju, North Chungcheong Province.

The new fab would mark the company’s first major front-end investment in Cheongju since announcing the expansion of its M15X facility there in 2022. Production is targeted to begin around 2029.

Samsung Electronics is also reviewing plans to build an advanced packaging facility and a wafer fabrication plant in Gwangju. Samsung Group Chairman Jay Y. Lee is expected to discuss the proposals with government officials on Thursday.

Combined investment by the two companies could amount to several hundred trillion won over the coming years, industry officials said.

CHALLENGES REMAIN

The ambitious relocation plans face significant hurdles.

Industry executives say front-end semiconductor plants are difficult to establish outside existing ecosystems, as they require dense supplier networks and highly specialized engineering talent.

The Honam region currently lacks a mature semiconductor supply chain, raising concerns over initial inefficiencies and labor shortages. Recruiting researchers and experienced process engineers to provincial locations could prove especially challenging.

Questions also remain over whether renewable energy alone can provide the stable, uninterrupted electricity required for 24-hour semiconductor production.

Analysts warn that the massive expansion could coincide with a future downturn in the semiconductor cycle, leaving companies exposed to high fixed costs if global supply eventually outpaces demand.

Still, industry observers view the projects as a watershed moment.

If successful, the new facilities could trigger broader corporate investment in southern Korea and create a second national semiconductor belt stretching from Honam to Chungcheong, reducing the country’s long-standing economic dependence on the Seoul metropolitan area, analysts said.

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