Gyeonggi Province’s Yongin City said on January 6 earlier this year that construction of an advanced semiconductor testbed (mini-fab) project, backed by a joint investment of about 1 trillion won from the central government, Gyeonggi Province, Yongin City and SK hynix, will begin in earnest this year (2025) to strengthen the technological competitiveness of materials, components and equipment suppliers in the semiconductor industry. The photo shows an aerial view of the Yongin Semiconductor Cluster. (Image courtesy of Yongin City)
SEOUL, Dec. 30 (Korea Bizwire) — South Korea’s semiconductor industry is pushing back against political calls to relocate the massive Yongin semiconductor cluster away from the Seoul metropolitan area, warning that any abrupt change to the project could disrupt investment plans and undermine the country’s global competitiveness in chips.
The concerns come after Kim Sung-hwan, the minister of climate, energy and environment, suggested that semiconductor plants should be built closer to power generation sites, prompting lawmakers and regional politicians to revive proposals to move the Yongin cluster to areas such as Saemangeum on the country’s southwest coast.
The Yongin project, estimated at up to 1,000 trillion won (about $750 billion), is already under way and is designed to become the world’s largest semiconductor manufacturing hub.
Industry officials argue that the Seoul metropolitan area offers unmatched advantages that go far beyond electricity supply. Semiconductor fabs are highly sensitive to power quality, with even a split-second outage capable of causing losses worth billions of won.
The capital region, South Korea’s largest electricity consumer, has the country’s most robust transmission and substation network, including looped grid systems that allow power to be rerouted instantly in case of disruption. New high-voltage direct current lines are also being built to bring electricity from eastern and southwestern power plants directly into the region.
Prime Minister Kim Min-seok is moving on after a commemorative photo during his visit to the construction site of the Yongin Semiconductor Cluster in Cheoin-gu, Yongin, Gyeonggi Province, on September 11. (Yonhap)
Labor considerations are another major concern. Semiconductor manufacturing relies heavily on highly skilled engineers, researchers and process specialists, many of whom are concentrated in and around the Seoul area. Industry executives warn that relocating fabs to more remote regions would exacerbate talent shortages and raise staff turnover.
They point to Taiwan Semiconductor Manufacturing Company, which places its most advanced production lines and research facilities near Taipei rather than in more distant manufacturing regions, as a model driven by workforce realities.
Logistics further strengthen the case for Yongin. About 96 percent of South Korea’s semiconductor exports pass through Incheon International Airport, reflecting the industry’s reliance on fast, air-based transport for high-value, sensitive chips.
Proximity to the airport allows companies to respond quickly to shifts in global demand while keeping logistics costs in check. The Yongin site also benefits from access to the Han River water system, enabling the supply of the vast volumes of industrial water required for chip fabrication.
Despite these advantages, political momentum behind decentralization has grown, fueled by arguments linking large-scale industrial projects to regional renewable energy zones and RE100 goals.
Critics within the industry counter that fragmenting or relocating the Yongin cluster would be costly, impractical and risky, especially as land acquisition and compensation procedures have already begun with the participation of Samsung Electronics, SK Hynix and other key players.
As debate intensifies, semiconductor companies are urging the government to provide policy stability, warning that uncertainty over location and infrastructure could deter long-term investment at a time when global competition in advanced chips is only accelerating.
Kevin Lee (kevinlee@koreabizwire.com)
