ED Korea’s semiconductor future cannot be built on capital-centric thinking

Exterior views of Samsung Electronics and SK hynix headquarters / News1 · Yonhap

The debate over whether Korea’s leading semiconductor manufacturers should expand into the country’s southwestern region has exposed a deeper question about the nation’s economic future: Should industrial policy continue to reinforce the dominance of the Seoul metropolitan area, or should it adapt to the realities of a carbon-constrained, energy-driven economy?

Recent reports that Samsung Electronics is considering a semiconductor packaging facility in Gwangju and SK hynix is exploring investment opportunities in South Jeolla Province have generated both excitement and controversy. Local governments see an opportunity to attract high-quality jobs and revive their economies. Meanwhile, industry observers warn against disrupting the powerful semiconductor ecosystem that has developed around existing clusters in the Seoul metropolitan area and Chungcheong provinces.

Both sides raise legitimate concerns, yet the discussion has too often been framed as a simple choice between economic efficiency and regional development. In reality, Korea’s long-term competitiveness may depend on reconciling the two.

For decades, the country’s semiconductor industry has benefited from geographical concentration. Production facilities, research centers, suppliers and highly skilled workers are clustered around major manufacturing hubs like those found in Pyeongtaek and Yongin in Gyeonggi Province, and Cheongju in North Chungcheong Province. This concentration has generated economies of scale, accelerated innovation and strengthened supply chain resilience.

It is understandable that many in the industry remain wary of dispersing advanced fabrication facilities across multiple regions. However, the conditions that shaped the industry’s success in the past are changing rapidly. In the emerging era of carbon neutrality and clean energy competition, access to abundant renewable electricity is becoming as important as access to capital, skilled workers or infrastructure. Global tech companies increasingly demand low-carbon supply chains, while the Climate Group's RE100 initiative has become a key benchmark for corporate sustainability. Semiconductor manufacturers that fail to secure reliable sources of renewable energy risk finding themselves at a competitive disadvantage.

In this regard, the Jeolla region possesses a strategic advantage that few other parts of Korea can match. Its vast plains, long coastline, strong solar resources and exceptional offshore wind potential make it the country’s most promising renewable energy hub. The region already produces more renewable electricity than existing transmission networks can efficiently absorb. Solar and wind generators are frequently forced to curtail production because the grid lacks sufficient capacity.

Proposals to construct extensive long-distance transmission lines to carry renewable electricity from Jeolla to energy-hungry industrial complexes in the capital region would require enormous financial investment, generate years of local opposition and reinforce a model in which provincial regions serve primarily as resource suppliers for metropolitan consumption.

A more rational approach would be to locate energy-intensive industries closer to where clean energy is generated. If semiconductor fabrication plants need huge amounts of electricity, it makes economic and environmental sense to build at least some of those facilities in regions where renewable energy is abundant. Doing so would reduce transmission losses, ease pressure on the national grid and help manufacturers meet increasingly stringent sustainability requirements.

Korea’s semiconductor industry is heavily concentrated in a relatively small number of locations. Any major natural disaster, infrastructure failure or security crisis affecting those areas could have severe consequences for the national economy. Recognizing such risks, competing semiconductor powers including the United States, Japan and Taiwan have sought to diversify production sites and strengthen supply chain resilience.

None of this justifies political interference in corporate decision-making. Semiconductor investments involve tens of billions of dollars and shape a company’s competitive position for decades. Decisions about where to build fabrication plants or advanced packaging facilities must ultimately be made by the companies themselves, based on technological, financial and strategic considerations. Governments should not pressure firms into relocating operations for political purposes, however worthy the goal of regional development may be.

The proper role of government is to create conditions that allow companies to make the best possible choices. That means investing in power infrastructure, water resources, transportation networks, workforce development and regulatory reform. It means ensuring that regions possess the capabilities necessary to attract world-class investment on their own merits.

Korea’s semiconductor future cannot be secured through either metropolitan concentration or politically driven decentralization. The challenge is to align industrial strategies with the realities of energy transition. Regions rich in renewable resources should not be reduced to energy colonies, nor should businesses be compelled to make economically unsound decisions in the name of balanced development.

The next phase of the country’s industrial success will depend on finding a new equilibrium that combines corporate autonomy, energy security, regional vitality and global competitiveness. In the age of renewable energy, where power is increasingly synonymous with economic strength, that balance may prove to be Korea’s most important strategic asset.