Gwangju's plan to foster chip, AI projects overshadowed by Gyeonggi Province's mega chip cluster decision

The site for a new semiconductor cluster is pictured from above, Monday, in Yongin, Gyeonggi Province, which will be part of the mega chip cluster to be completed by Samsung Electronics, SK hynix and the central government by 2047. Yonhap

A joint economic drive by Gwangju Metropolitan City and South Jeolla Province to attract semiconductor and artificial intelligence (AI) companies has been hit with a setback since the central government's recent announcement on the development of a mega chip cluster in Gyeonggi Province, according to Gwangju and South Jeolla Province officials, Friday.

The southwestern region's joint bid to introduce a specialized chip cluster just outside Gwangju has now been put on hold due to the Yoon Suk Yeol administration's selection of Yongin and Pyeongtaek — both of which are located in Gyeonggi Province — to develop the chip industry further, they argued.

Last July, the local authorities of the southwestern region submitted a proposal to the Ministry of Trade, Industry and Energy after the ministry in December 2022 put forward a national project to introduce specialized chip complexes in various cities nationwide. The ministry later that month selected the cities of Yongin, Pyeongtaek and Gumi.

Furthermore, President Yoon earlier this week announced his administration's decision to support the initiatives of Samsung Electronics and SK hynix to build 16 new fabrication plants in three southern Gyeonggi Province cities, including Yongin and Pyeongtaek, turning the region into the country's biggest chip cluster with the world's highest capability to manufacture wafers.

This decision made it quite clear that the chip initiatives of Gwangju and South Jeolla Province would be dwarfed by Gyeonggi Province's. The local governments said that the central government didn't accept their goal to implement renewable energy in the running of their new chip complex because the plan required too much legal groundwork. President Yoon, upon announcing the mega chip cluster plan for southern Gyeonggi Province, instead highlighted the importance of nuclear power plants in supplying electricity stably to the cluster.

NHN Cloud, one of the country's leading cloud service providers, operates the National AI Data Center in Gwangju. Courtesy of NHN Cloud

"To run a mega chip cluster requires a significant amount of water and electricity," an official from the Semiconductor Business Team under Gwangju Metropolitan City said.

"Our plan, by drawing clean power from coastal regions through power cables, could build a chip cluster that completely meets RE100 conditions. It is impossible in Gyeonggi Province. But carrying out the task requires installing new power distribution lines through local communities and passage of a special law at the National Assembly. Such conditions take lots of state budget, time and the consent of local residents which isn't guaranteed," he said.

The central government selected Gyeonggi Province for the chip cluster project because cities in the region already have existing infrastructure and businesses up and running in the industry, according to an official from the Semiconductor Team under the provincial government's New Growth Business Department. There is an existing chip cluster in southern Gyeonggi Province with 19 production fabrication plants and two research facilities, which will be part of the mega chip cluster that will be completed by 2047.

"The central government's plan to introduce a specialized state-level industrial complex is managed by the industry ministry," the official said. "We will wait and see when the ministry will post another bid in the future."

Gwangju's AI business also faced a setback after the central government declined the local government's request for 14 billion won ($10.5 million) from the state budget to operate a new state-run AI data center in the city more efficiently.

Opening last November to replace its temporary facility in Seongnam, Gyeonggi Province, the National AI Data Center is a key part of the city's AI-specializing industrial complex project, which it has been pursuing since 2020 until the end of this year. It is operated by NHN Cloud, one of the country's leading cloud service providers.

The city government had repeatedly communicated with the presidential office to invite President Yoon to the center's opening ceremony but they kept being declined.

"To provide data to private firms clustered inside the complex, we needed the funding for the pretreatment of the data before sharing it with the firms," an official from the AI Team under Gwangju Metropolitan City said. "But the central government told us to hold the request for now and resubmit it next year when it plans to accept proposals from local governments for large-scale, five-year projects."