Samsung mulls new chip packaging plant in Gwangju

Samsung Electronics' Pyeongtaek semiconductor plant in Gyeonggi Province, May 20 / Yonhap

Samsung Electronics is doing a feasibility study on establishing a semiconductor packaging plant in the southwestern city of Gwangju, government and industry officials said Wednesday, noting that plans will likely be announced during a presidential meeting later this month.

According to officials, Samsung Electronics is now reviewing its investment plan for the new semiconductor packaging plant to address growing memory chip demands and in response to President Lee Jae Myung's push for more balanced regional development.

If the plan is finalized, the facility is expected to be responsible for advanced semiconductor packaging for Samsung Electronics' latest chips, including high-bandwidth memory (HBM).

Samsung Electronics' high-bandwidth memory 4E / Courtesy of Samsung Electronics

Packaging, which comes after the fabrication process in semiconductor manufacturing, was traditionally regarded as a lower-value, less technologically demanding stage, compared with front-end wafer processing, where ultrafine circuits are etched onto wafers using highly sophisticated equipment. However, as artificial intelligence semiconductors become increasingly advanced, the ability to integrate and stack multiple chip dies has emerged as a critical performance factor, with technologies such as 2.5D and 3D packaging driving increasing investment.

Samsung Electronics operates semiconductor packaging facilities at its Onyang plant in South Chungcheong Province, which was established in 1991, and has also converted former LCD production lines at Samsung Display's Cheonan campus, also in South Chungcheong Province, for packaging operations. The sources said the company is considering a new facility as demand for advanced chips continues to grow and packaging technologies become increasingly sophisticated.

Sources also said SK hynix is considering additional investments in either the Chungcheong or Jeolla regions, although they did not provide further details.

Both Samsung Electronics and SK hynix, however, denied that any such plans had been finalized. A Samsung Electronics official said “nothing has been decided, and we are not aware of any confirmed plans," and SK hynix gave a similar response. Since SK hynix recently announced plans to build a new packaging facility in Cheongju, semiconductor chip industry officials questioned the feasibility.

During the Nikkei Forum Future of Asia in Tokyo on Wednesday, SK Group Chairman Chey Tae-won said "various factors should be considered" when determining the location for a new semiconductor plant, noting that such a plant requires massive infrastructure investment.

Nevertheless, political circles have already begun treating the investment as a near certainty.

Min Hyung-bae, the mayor-elect of Gwangju and a lawmaker of the ruling Democratic Party of Korea, recently said the prime minister had told him that "something is definitely coming” related to semiconductors, adding that a more concrete announcement could be made in the near future.

Prime Minister Kim Min-seok, left, holds hands with Gwangju Mayor-elect Min Hyung-bae during a forum in Gwangju, Saturday. Yonhap

The Korean president also said during a news conference on Monday that his administration would soon unveil a large-scale investment project.

If the investment plan is finalized, Samsung will need to navigate several challenges.

One is securing a talented workforce. While semiconductor packaging requires fewer workers than wafer fabrication, advanced packaging technologies are increasing the demand for highly skilled engineers and researchers, meaning the project may face opposition from existing employees. Samsung Electronics also relies on partnerships with nearby universities offering semiconductor-related programs to build its talent pipeline, but the Gwangju and South Jeolla region currently lacks a comparable concentration of such academic programs.

Another challenge is securing a stable water supply required for semiconductor manufacturing. Most of Samsung's existing manufacturing clusters are located in Gyeonggi Province or regions close to the province, because of extensive water infrastructure connected to major sources such as the Han River system and Chungju Dam. The Gwangju and South Jeolla region, however, is geographically more vulnerable to drought and has fewer options for developing large-scale reservoirs, raising questions about whether sufficient industrial water supplies can be secured.

Logistics is another concern. Most semiconductors are exported by air, but the region currently lacks the cargo aviation infrastructure needed to ship advanced semiconductor products directly overseas. As a result, chips packaged in Gwangju could still need to be transported to Incheon International Airport for export.

A proposed airport project in the nearby Saemangeum area that could accommodate cargo aircraft remains under discussion, although its feasibility continues to face legal and political challenges.

"The government's commitment to the project is strong," an industry official said. "If the investment moves forward, government-level support will also be needed to address the practical challenges."