The South Korean government has announced its intention to establish a major new semiconductor industry hub in the country's southwest region within the next four years. However, significant opposition from local residents, primarily focused on the project's massive electricity and water requirements, has emerged as a potential major obstacle to its realization.
Korea Electric Power (KEP) and other involved entities will need to secure new energy supplies to meet the future operational demands of this initiative, known as the Honam Semiconductor Mega Cluster. With an estimated investment of at least 800 trillion won (approximately 3.65 trillion yuan), the project is a key part of President Lee Jae-myung's strategy to advance AI chip development and decentralize industrial growth away from the capital region. The government aims to complete the cluster before the end of Lee's term in 2030. Analysts point out that the power demand from just four planned wafer fabs would equate to 70-80% of the current annual electricity consumption of the Gwangju, North Jeolla, and South Jeolla provinces combined.
Key Obstacles to Development
Local residents have expressed strong opposition to the construction of new power transmission lines or nuclear reactors, citing a lack of proper consultation in past and current energy infrastructure projects. They also oppose government plans to raise the height of existing dams to supply water to the complex, again due to insufficient prior communication. A chief analyst at S&P Global Energy noted that the core issue is a region with historically low large-scale power demand suddenly facing a massive new requirement. Experts believe that without a significant acceleration in infrastructure development, it will be difficult for the cluster to operate at full capacity by 2030.
Government's Proposed Solutions and Past Precedents
The Ministry of Trade, Industry and Energy has stated that the southwest region's current power generation capacity already exceeds local demand. It argues that if new fabs are located there, most electricity could be produced locally, reducing the need for new long-distance transmission lines. The ministry pledged to work closely with local governments to build supporting power infrastructure ahead of the fabs' operation and to improve public acceptance, such as by using underground power lines in densely populated areas. The minister also indicated the government is considering building new large-scale nuclear power plants and small modular reactors to meet future needs.
The Yongin semiconductor cluster near Seoul serves as a cautionary example of infrastructure bottlenecks. Both Samsung Electronics and SK Hynix have faced delays in expanding chip manufacturing capacity in Yongin due to power and water supply issues. The mayor of Yongin stated that opposition from residents delayed the approval process for a water supply plan for an SK Hynix fab by months, adding that resolving such conflicts should be a central government responsibility. The national government has stated it will assist both companies in accelerating the Yongin project.
Local Resistance and Water Supply Complexities
In Yeonggwang County, a significant nuclear power base in the southwest, local opposition to nuclear expansion is firm. A farmers' and anti-nuclear group co-chair stated residents would resort to lawsuits to block any plans to extend the life of old reactors or build new ones, fearing the area could become a permanent nuclear waste disposal site.
The water supply issue is equally complex. The Honam cluster's daily demand for industrial water is estimated at about 650,000 tons, exceeding Gwangju city's current total daily residential water use. Developers hope to avoid building new large dams by using recycled water and supplies from five existing dams, including raising the Dongbok Dam to add roughly 250,000 tons of daily supply capacity. A representative of residents near the Dongbok Dam argued that raising the dam is effectively no different from building a new one and criticized the government for announcing the plan unilaterally without considering residents' acceptance. An estimated 1,500 to 1,600 households could be directly or indirectly affected.
The Ministry of Trade, Industry and Energy responded that raising existing dams minimizes environmental impact and resident relocation compared to building new ones. It stated that future communication with the Gwangju city government and local residents would continue to try and prevent project delays caused by opposition or infrastructure problems.
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