[K-Semiconductor Crisis Theory]③ Competitors Are Advancing... Investment Plans Made but Execution Is Slow

The 'High Wall' That Even Samsung and SK Struggle With

Yongin Semiconductor Cluster Location Map

[Asia Economy Reporter Moon Chaeseok] The dark shadow cast over South Korea's semiconductor industry can be seen in the sluggish pace of domestic facility investment execution. Although local governments across the country?including Yongin and Seongnam cities in Gyeonggi Province, Gangwon Province, Jeju Island, Jeollanam-do and Jeollabuk-do, and Chungcheong Province?have presented their own industrial complex (cluster) development plans, no remarkable achievements have been recorded, and even the planned investment execution remains stagnant.

A representative example is the case where the construction of SK Hynix's Yongin semiconductor cluster plant, the largest in the country with a scale of 120 trillion won, was blocked by Yeoju City's refusal to grant permits for industrial water pipelines. As a result, concerns have even arisen that the synergy effect with national semiconductor promotion policies focused on talent development?such as education reform and corporate recruitment announcements?may not be significant.

According to the semiconductor industry on the 29th, the construction of four plants in SK Hynix's Yongin semiconductor cluster, the largest in the country with a scale of 120 trillion won, is stalled due to Yeoju City's announcement to suspend permits for industrial water pipelines. Recently, Yeoju City has demanded the government to carry out urban development projects and expand Local Road 541 in exchange for supplying water to Yongin, creating a complex situation. It is difficult for SK Hynix to resolve this alone, and the Ministry of Trade, Industry and Energy is engaged in a tug-of-war with Yeoju and Yongin cities.

SK Hynix's Yongin semiconductor plant construction has been heavily criticized for "not even breaking ground three years after the plan announcement," representing a typical case of sluggish facility investment performance. The issue of acceptance is also acute, as about 1,000 Yeoju citizens held a rally demanding that water intake be permitted only after establishing a win-win plan.

Historically, local government permits and resident acceptance have been the biggest obstacles to facility investment execution. The conflict between SK Hynix and Yeoju City echoes past memories, such as when residents of Wongok-myeon, Anseong City, Gyeonggi Province, raised issues during the construction of Samsung Electronics' Pyeongtaek campus in 2013, demanding that power lines be buried underground, which resulted in an additional cost of about 75 billion won.

No matter how grand the investment plan is, if execution is slow, corporate investment sentiment naturally declines. Job creation and talent acquisition also become difficult. In the worst case, there are concerns that delays in government talent development policies and budget allocations, combined with corporate investment execution delays, could cause South Korea to fall behind competing countries.

As facility investment execution remains sluggish, even "rosy prospects" such as synergy with government promotion policies and attracting returning companies are losing momentum. Earlier, the government announced the "Semiconductor Superpower Achievement Strategy" in July, pledging to significantly increase the floor area ratio of semiconductor complexes from 350% to 490%, but if local government permits and acceptance issues are not resolved, nothing can proceed, leaving only a lesson behind.

The industry also has no sharp countermeasures and is only hoping for government responses. A representative case is the joint statement issued last month by four organizations?the Korea Semiconductor Industry Association, the Korean Institute of Electrical Engineers, the Korea Semiconductor Display Technology Society, and the Semiconductor Society?urging the prompt passage of the Semiconductor Industry Competitiveness Enhancement Act (K-Chips Act) in the National Assembly.

At a meeting with the Federation of Korean Industries the day before, Yang Hyangja, chairperson of the People Power Party's Semiconductor Special Committee, also urged the passage of the K-Chips Act in the National Assembly in the same context. An industry official said, "From a corporate perspective, timely investment execution is essential to maintain competitiveness, and this requires cooperation from local communities and governments. We hope that, as seen in overseas cases, smooth consultations on corporate investment will be conducted in a timely manner domestically as well."