The government is building apartments on the land of the president’s U.S. semiconductor company

The research and development (R&D) center of a global semiconductor equipment company that was scheduled to be built in Osan, Gyeonggi-do, is in danger of being canceled. This is an investment that the government promoted extensively, saying it was attracted by President Yoon Seok-yeol’s visit to the United States in 2022. However, the construction of the R&D center was put on hold as the site purchased by this company was included in a candidate site for public housing designated by the Ministry of Land, Infrastructure and Transport.

According to the semiconductor industry on the 26th, the land purchased by Applied Materials (AMAT) of the United States in Osan, Gyeonggi-do was found to be within the new residential site candidate site (Osan Segyo District 3). AMAT is the world’s second largest semiconductor equipment company after Netherlands’ ASML. AMAT plans to invest hundreds of billions of won to build a semiconductor equipment R&D center with the goal of completion in 2025, and signed a sales contract with the land owner in August last year. However, about three months later, this land was included in the candidate site for housing supply measures for approximately 80,000 households announced by the government. If it is included in public residential land, development activities are prohibited, making it impossible to build an R&D center.

Policies to create residential land are also important to stabilize the real estate market. However, considering that countries around the world are attracting companies by providing astronomical subsidies to strengthen semiconductor competitiveness, it is pointed out that administrative measures such as searching for alternative sites or excluding them from housing land are necessary. However, to date, there has been no specific movement from the Ministry of Land, Infrastructure and Transport or the Ministry of Trade, Industry and Energy. Professor Ahn Jun-mo of Korea University said, “This symbolically shows that there is no national plan for high-tech industries such as semiconductors.”

AMAT submitted a foreign investment report to the Ministry of Trade, Industry and Energy in September 2022 to build a research and development (R&D) center in Korea. AMAT is a company that manufactures equipment related to core processes that process semiconductor wafers. At the time, the government promoted that it had attracted $1.15 billion (approximately 1.6 trillion won) in investment from seven global companies, including AMAT, in line with President Yoon Seok-yeol’s visit to the United States. Although AMAT’s exact investment size is unknown, the industry estimates that it will amount to hundreds of billions of won. In the semiconductor industry, it was expected that the establishment of R&D bases in Korea by global equipment companies would be of great help to the semiconductor equipment industry, which was relatively weak in Korea. This could also be an opportunity to strengthen AMAT’s cooperation with domestic semiconductor companies such as Samsung Electronics and SK Hynix.

AMAT searched for a site in Gyeonggi-do, where the production facilities of semiconductor companies such as Samsung Electronics and SK Hynix are located. At first, we considered Yongin, but gave up because we could not resolve the power supply issue with Korea Electric Power Corporation. The site we found again with difficulty was Gajeong-dong, Osan. It is the midpoint between Pyeongtaek and Hwaseong, where Samsung Electronics’ production and R&D facilities are located, and SK Hynix’s Yongin semiconductor cluster. AMAT is known to have signed a contract for 17,938 m2 of land in August last year. It is said that the basic architectural design has already been completed, and a schedule for bringing in semiconductor equipment has been set with the goal of completion in 2025.

However, as the Ministry of Land, Infrastructure and Transport announced new housing site candidates on November 15 last year, setbacks in the schedule became inevitable. This is because the land purchased by AMAT was included in the public housing land in Osan Segyo District 3. Most of the purchase price had already been paid, and only the final administrative procedure, registration, was left. The Ministry of Land, Infrastructure and Transport plans to complete district designation by the first half of 2025 and proceed with pre-subscription and housing project plan approval in 2027.

The problem is that development activities are prohibited after the public housing site candidate site is announced. A method of excluding AMAT’s site from the district in consultation with the government is also being discussed, but this is not expected to be easy. An official from the Ministry of Land, Infrastructure and Transport said, “Due to equity issues with other companies, unless there is a special case, we will go ahead with the original plan.” An official from the Ministry of Trade, Industry and Energy said, “We were in frequent contact with companies to check the progress of investments.”

There is also a way to prepare an alternative site for the company to relocate to, but the original plan will inevitably be delayed. AMAT has not released an official position regarding the R&D center. An official in the semiconductor industry said, “Osan Segyo District 3 is scheduled to be developed as a semiconductor cluster hinterland city, but a farce is taking place in such a place that is destroying the investment of global semiconductor companies.”