[Exclusive] Government to Provide Generous Support for Power Supply to Semiconductor Cluster

Construction of Transmission Lines for Yongin Semiconductor Cluster Operation
Construction Costs Expected to Reach Trillions of Won
"Infrastructure Cost Support at a Level Satisfying Companies"

The government is making a bold move to resolve the power supply issue for the Yongin semiconductor cluster. It has decided to cover a significant portion of the costs involved in constructing dedicated transmission lines to connect the necessary power to the cluster. While countries around the world compete with subsidies for the semiconductor industry, our government is focusing on infrastructure development and preparing large-scale support measures.

A panoramic view of the area around Idong Namsa-eup where the Yongin Advanced System Semiconductor National Industrial Complex will be established. The road running through the center is National Route 45. Provided by Yongin City.

According to a comprehensive report by Asia Economy on the 25th, the Ministry of Economy and Finance, the Ministry of Trade, Industry and Energy, and Korea Electric Power Corporation (KEPCO) are preparing semiconductor industry support measures that include government subsidies covering a substantial part of the costs to solve the power shortage at the Yongin semiconductor complex. This is a separate support plan from the government’s 26 trillion won ‘Comprehensive Semiconductor Ecosystem Support Plan’ announced last month, which centered on semiconductor financial support programs. A government official said, “Although it is not a direct subsidy, a support plan for infrastructure construction costs that will satisfy companies sufficiently will be prepared.” The scale of support is expected to reach several trillion won.

The semiconductor industry anticipates that building the approximately 110 km transmission lines required to operate the Yongin semiconductor cluster will cost several trillion won. About a decade ago, Samsung Electronics spent 400 billion won to build a 23 km transmission network to operate its Pyeongtaek campus. An industry insider said, “Considering the different terrain and other factors compared to the Pyeongtaek campus, it is difficult to simply calculate based on the costs from ten years ago,” but added, “It will require a large-scale investment.”

To operate the Yongin semiconductor cluster, a massive amount of power equivalent to 10 nuclear reactors must be procured. A leading plan is to build transmission lines to bring electricity gathered in the Taean area all the way to Yongin to supply the power.

The problem lies in the cost, which runs into several trillion won. According to KEPCO’s ‘Transmission Line Facility Regulations,’ under the beneficiary-pays principle, if infrastructure is installed due to the supplier’s circumstances, the companies benefiting from it must bear the construction costs. In principle, Samsung Electronics would have to cover the entire construction cost amounting to several trillion won.

Yongin Semiconductor Mega Cluster Infographic / Provided by Ministry of Trade, Industry and Energy

The government views requiring semiconductor companies, which already pay several trillion won annually in electricity bills, to also cover the transmission network construction costs as an excessively heavy burden. Accordingly, opinions have been raised inside and outside the government that KEPCO’s related regulations should be amended by board resolution to allow government funding support. However, since KEPCO’s board, struggling with large deficits, may be reluctant to make decisions that increase its own burden, discussions have been held on preparing support measures through amendments to the higher-level ‘Electric Utility Act.’

Semiconductor Industry: "Infrastructure Support is Urgent"

The semiconductor industry is in dire need of power infrastructure support in addition to subsidies. Semiconductors operate factories 24/7 year-round and involve various manufacturing facilities, resulting in substantial power consumption. Samsung Electronics and SK Hynix rank as the first and second largest power consumers in Korea. Samsung Electronics’ annual power consumption reached 21,731 GWh as of 2022.

Major countries participating in the semiconductor supremacy competition, such as the United States, Japan, and Taiwan, are introducing various measures to support power infrastructure. In Japan, power-related permits and approvals have been streamlined, and recently, to supply power to the TSMC foundry (semiconductor contract manufacturing) plant in Kumamoto Prefecture, new substations and transmission lines have been constructed, showing active efforts. However, a government official stated, “It has not yet been finalized how much of the costs will be borne by the government and companies.”