AI memory boom gives southwest regions rare opening, but Samsung, SK still need math to work
Across Korea’s southwest, politicians have spent the last week hinting that the country’s two chip giants may be preparing investments there. Samsung Electronics and SK hynix say they know nothing about it.
The promise was put most plainly on June 6, when Min Hyung-bae, the incoming leader of the new unified Gwangju region, told a forum that the prime minister had leaned in and told him, quietly, that “something is coming.” That something, he indicated, was a share of the semiconductor boom that has enriched both companies while much of the country looked on.
Whether it is in fact coming, neither firm will confirm. But that has done little to slow the building expectations.
Companies say they “know nothing”
For an investment no company has acknowledged, the particulars are unusually specific. Samsung has been reported to have “virtually settled” on Gwangju’s Cheomdan 3 district, while SK hynix is said to be weighing sites in Gwangju and nearby Muan.
Both would be firsts for a region that has never hosted a Samsung or SK hynix semiconductor plant.
One element is already visible. Amkor Technology Korea, a global chip packaging firm with a plant in Gwangju, is spending roughly 1 trillion won ($661 million) on expanding after winning more back-end orders from Taiwan’s TSMC. Whether or not the larger Korean players confirm their plans, a packaging base is forming in the region.
Reporting has run ahead of the companies. One local media outlet called the Samsung site “effectively confirmed”; another described Cheomdan 3 as the leading candidate. Samsung’s response has been that it “knows nothing.”
Politicians hint that “something is coming”
The pressure to expand is real. The AI boom has both firms racing to add high-bandwidth memory, or HBM, the stacked chips that feed AI servers. Chipmaking is generally split into two processes: the power-hungry “fab” that etches the circuits, and the lighter “packaging” that assembles and tests them. The southwest is reportedly being offered packaging, not a full fab.
The government would welcome any. After June’s local elections, it has sharpened an existing push to draw high-value industry out of the overcrowded capital region. On Monday, Prime Minister Kim Min-seok told newly elected regional leaders, including Min, that the government would offer “drastic financial support” to bring more corporate investment outside the Seoul area.
President Lee Jae Myung made a similar case at his first-anniversary news conference last week, saying the power-hungry industry will run cheaper in regions such as the southwestern provinces.
But the chaebol chairs have been less accommodating. At a recent forum in Tokyo, SK Chairman Chey Tae-won said the company would build “where power, water, land and people are all in place,” and added that “if it can’t be done in Korea, we may have to go abroad.”
The trouble with moving south
Packaging is, in theory, the movable part of chipmaking, “less demanding of water and power, more reliant on labor,” as one industry official said, and able “in principle” to sit anywhere.
The catch is HBM. Its advanced packaging works best beside the fab, which is why SK hynix, announcing its Cheongju plant earlier this year, stressed the value of staying close to chip production.
Employees have been blunter than executives. On the anonymous forum Blind, one SK hynix worker estimated that simply moving components to the southwest could “take a full day.” A Samsung engineer doubted the workforce would follow. “You have to ask first whether staffing will even work,” he wrote.
A lawmaker says “investment itself is decided”
The commercial case is nonetheless genuine. Because this is HBM packaging for AI rather than the older commodity variety, another industry official told The Korea Herald, “the value-add will be much greater.”
The limit is that packaging alone does not carry an economy the way larger, supplier-dense fabrication plants can. “Just moving a plant,” the official noted, “doesn’t build an ecosystem.”
That is why SK hynix may be the more consequential question. Samsung’s Gwangju site looks the more settled of the two, at least in local reporting, and is expected to be a packaging plant. SK hynix still appears to have more choices: Gwangju or Muan, Korea or overseas, packaging alone or something more ambitious later.
“As I understand it, the investment itself is decided,” Jung Jin-wook, a lawmaker on the National Assembly’s industry committee, told KBS on Monday. SK hynix, for its part, says “nothing has been decided.” What remains in question, in Jung’s account, “is whether it comes as a manufacturing fab, or back-end work.”
A clearer answer is expected on June 29, when President Lee meets the heads of the country’s largest conglomerates.
“Pushing this purely for show, or for political ends, can create significant cost and inefficiency,” said Kwon Seok-jun, a chemical engineering professor at Sungkyunkwan University who studies semiconductor materials and processes. “It cannot be forced on companies. They have to be offered real benefits.”
mjh@heraldcorp.com
