This time, the power plant is the problem… SK Yongin factory has not been able to start construction for 6 years

The four factories that SK Hynix announced in February 2019 that it would invest 120 trillion won to build on a 4.15 million ㎡ (1.26 million pyeong) site in Wonsam-myeon, Cheoin-gu, Yongin-si have not even started construction for 6 years since the plan was established. According to the original plan, construction should have started early last year and the factory should be operational early next year, but residents of neighboring cities held back, saying wastewater would flow in, and other cities demanded ‘compensation’, saying there could be a shortage of agricultural water. Land owners in the area where the factory was to be built held out for two years. In competing countries such as the United States and Japan, thanks to active support from the government and residents, corn fields in Texas and Kumamoto are being transformed into large-scale semiconductor factories for Samsung Electronics and TSMC, but in Korea, semiconductor factory construction has been blocked by obstacles such as licensing and civil complaints.

◇It is unclear whether construction will begin next year on the plant’s ankle.

SK Hynix Yongin Semiconductor Cluster began selecting land last year, overcoming various difficulties. However, this time, the construction of an unexpected power plant is blocking the project. Semiconductor factories filled with large-scale facilities are considered representative facilities that consume a lot of power, along with data centers and steel mills. From the initial planning stage, SK Hynix planned to receive electricity and steam needed for plant operation from a 1,200 MW (megawatt) LNG (liquefied natural gas) power plant built and operated by its affiliate, SK E&S. Construction was scheduled to begin in May of this year, but the Ministry of Trade, Industry and Energy, the responsible ministry, put the brakes on the construction of the power plant on the grounds of ‘carbon neutrality’. LNG power plants generate power using natural gas, a fossil fuel, and the government began to look closely at new LNG power plant construction plans from the beginning of this year, saying it would meet carbon reduction goals such as ‘carbon neutrality by 2050′. The last thing SK Hynix expects is for this LNG power plant to be included in the ’11th Basic Electricity Supply and Demand Plan’, which is expected to be announced in the first half of this year. If you are left off the list this time, you will have to wait another two years in vain until the next plan is established.

It is reported that SK Hynix will produce high-bandwidth memory (HBM), which has recently attracted attention as a key component of AI semiconductors, at the Yongin semiconductor cluster. In a situation where major countries such as the United States, which are competing for the super gap in semiconductors, are rapidly expanding their domestic production bases, there are concerns that only Korea may fall behind in the race. A semiconductor industry official said, “Considering the size of SK Hynix’s Yongin semiconductor plant, which has four plants, there is virtually no alternative if the construction of the LNG power plant is canceled.” According to the industry, the power capacity required for one semiconductor factory exceeds 700MW, and for four factories, it reaches 3,000MW. In the reality where it is difficult to build a transmission and distribution network, problems with electricity supply and demand are bound to arise without the construction of a separate power plant.

◇Support is unexpected… Everything is different here and there

It is pointed out that the SK Hynix Yongin semiconductor cluster construction process clearly shows Korea’s reality, which is different from other countries, where the government and local governments work as a ‘one team’ to attract semiconductor factories. SK Hynix established a plan to invest 120 trillion won in 2019, but has wasted the past 5 years for various reasons, and has had to give a ‘gift’ every time licensing is delayed.

When Anseong City became a problem with wastewater, it decided to create a semiconductor industry-related hinterland industrial complex in Anseong, and when Yeoju City requested a ‘coexistence plan’ due to water issues, it promised to buy Yeoju rice and send partner companies to Yeoju City. . Residents of the land where the factory was to be built also opposed the expropriation. All of these obstacles were resolved by the end of 2022, but this time, the power plant is holding back.

There are voices calling for deregulation and preparation of support measures for the semiconductor industry, which is a national strategic industry and our No. 1 export item. Ahn Ki-hyeon, executive director of the Korea Semiconductor Industry Association, said, “The longer factory construction is delayed for various reasons, the more we miss the timing, and our semiconductor industry has no choice but to decline.”