Experts say Honam semiconductor cluster needs concrete plan, not just talk of abundant power and water

As the government prepares to unveil a plan to build a semiconductor cluster in the Honam region worth 1,000 trillion won ($648 billion), experts are calling on authorities to present concrete measures for securing stable electricity, water and skilled workers.

Semiconductor factories operate around the clock and rank among the most power-intensive industrial facilities, making it difficult to persuade companies to invest with vague assurances that the region has abundant renewable energy or sufficient water, experts said. They also flagged the so-called "talent southern boundary" — the tendency of top-tier workers to avoid relocating south of the Greater Seoul area — and the need to build a materials, parts and equipment ecosystem as challenges that must be addressed.

President Lee Jae-myung will chair the "Great Leap Forward: Three National Mega-Projects Public Briefing" at Cheong Wa Dae on Monday. The government envisions directing advanced-technology investment across the Honam, Chungcheong and Yeongnam regions to restructure industry for the AI era and promote balanced national development. The centerpiece is a large-scale semiconductor cluster in Honam expected to draw more than 1,000 trillion won in investment over the next decade. The Ministry of Trade, Industry and Energy, the Ministry of Science and ICT, the Ministry of Climate, Environment and Energy, and the Ministry of Land, Infrastructure and Transport are all set to announce government support policies to underpin corporate investment. A concrete blueprint addressing site-selection criteria and plans for water and electricity supply — issues the People Power Party has repeatedly questioned — is also expected to be presented.

Yoo Seung-hoon, a professor in the Department of Future Energy Convergence at Seoul National University of Science and Technology, said the region's abundant renewable energy alone would not be enough to meet the enormous power demands of semiconductor factories.

"Renewable energy is relatively plentiful, but solar power is credited with only about 15 percent of its installed capacity for supply-planning purposes," Yoo said. "Even if you install 10 gigawatts, the electricity you can reliably use in practice is only around 1.5 gigawatts."

He added that solar power's high intermittency means generation can be difficult during the rainy season — potentially for two to three consecutive days in early June. "Ultimately, you need to build an east-west transmission grid connecting the Honam region to nuclear power plants in Gyeongju Wolseong, Busan Gijang and Ulsan to ensure a stable electricity supply," he said.

Yoo also recommended keeping the Hanbit nuclear power plant — the only large-scale baseload power source in the region — running continuously and reliably. He called for building large-scale energy storage systems capable of absorbing sharp fluctuations in renewable output, and constructing additional LNG combined heat and power plants that can respond immediately to short-term power gaps or grid failures.

Honam has ample generation capacity but a weak transmission network. As of last year, the region's installed generation capacity stood at about 23.3 gigawatts — more than four times its local electricity demand of 5 gigawatts. The 345-kilovolt transmission lines needed to deliver that power reliably to large industrial complexes are in short supply, however. The Korea Power Exchange projects that 12 of the 13 existing 345-kilovolt transmission lines in the Honam region will reach their capacity limits between 2026 and 2030.

Securing stable baseload power is another unresolved challenge. The region has the Hanbit nuclear power plant, but uncertainty surrounds its future operation. Of Hanbit's six units in Yeonggwang, Unit 1 reached the end of its 40-year design life late last year and has been shut down, while Unit 2 is set to cease operation in September. Units 3 through 6 will also reach the end of their design lives sequentially from 2034. Public sentiment in the Honam region runs against extending Hanbit's operation, and local renewable energy developers are waiting for the plant to go offline so that grid capacity opens up.

Given the scale of the challenges surrounding power infrastructure, experts stress that the government must acknowledge realistic limitations and develop remedies accordingly. "Nothing about this is easy, but that's not a reason to give up," Yoo said. "We need to clearly recognize our limitations and come up with ways to overcome them." He added that simply saying the region has plenty of water and electricity "just won't cut it."

Securing an adequate water supply is another major hurdle. A single semiconductor fabrication plant requires about 200,000 metric tons of ultrapure water per day — used for process cleaning, impurity removal and maintaining the temperature and humidity of cleanrooms. A stable water supply is also essential for controlling cleanroom temperature and humidity.

Jeong Hyeong-gon, a senior research fellow at the Korea Institute for International Economic Policy, said electricity and water are the two most critical factors in semiconductor manufacturing. "Concrete measures related to water supply must be presented before semiconductor factories can be established in the Honam region," he said.

Professor Yoo also pointed to data from the Ministry of Climate, Environment and Energy classifying the Yeongsan and Seomjin river basins as areas expected to face water shortages by 2030. "The government has said it can supply 1 million metric tons per day, so a specific explanation of how it plans to secure that amount is needed," he said. He added that the Yeongsan and Seomjin basins suffer not only from lower water volumes compared with the Han River or the Nakdong River, but also from poorer water quality. "One fab needs 200,000 metric tons of water, so the announced figure of 1 million metric tons — enough for five fabs — is something we will have to watch closely," he said.

Experts said that government support for attracting talent and corporate investment — no less critical than securing electricity and water — will determine whether the project succeeds or fails.

Yoo Hoi-jun, a professor in the School of Electrical Engineering at KAIST, said companies move only when returns on investment are assured. "Tax incentives and measures such as free land leases need to be strengthened so that companies see regional investment as economically advantageous," he said. He added that policies to nurture the semiconductor industry outside the capital region are necessary from a balanced-development standpoint, rather than concentrating industry solely in Greater Seoul.

Kim Jeong-sik, a professor of economics at Yonsei University, said successful industrial clusters are invariably surrounded by top universities and research institutions. "Silicon Valley has Stanford, and Boston has Harvard and MIT — research and education infrastructure must be in place," he said. He added that improving living conditions in the region is equally essential to drawing talented workers away from the capital area. "All of these conditions need to come together to meet the requirements of a genuine cluster," he said.