South Korea's Southwestern Chip Cluster Power Supply Accelerates, Samsung and SK Invest Over 896 Trillion Won
Claire Weston
South Korea signed investment MOUs worth over KRW 896 trillion with Samsung, SK hynix, and Amkor to build chip fabs and AI data centers in its southwest; power infrastructure is targeted for completion by 2030, and the resulting energy-storage demand has already triggered a scramble among battery makers.
Where is this new chip base, and how big is it?
The site is the Gwangju military airfield, slated to become the country's second-largest semiconductor production hub after the Seoul capital region.
Three companies split the investment: SK commits roughly KRW 470 trillion for two memory fabs and a 1 GW AI data center; Samsung commits KRW 425 trillion for two memory fabs and a national AI computing center; Amkor pledges KRW 1 trillion to expand advanced packaging in Gwangju.
This means → Korea is duplicating chip capacity from the Seoul area into the southwest — memory, packaging, and compute laid down in parallel.
Where does the power come from — and is there enough?
The government set an initial supply target of 6.3 GW for southwest chip fabs; including AI data centers, the cluster may need roughly 24.7 GW of new generation capacity.
The climate and energy ministry says existing renewables and nuclear capacity in the Honam region already cover the added demand — no dedicated cross-regional transmission corridor is required.
In plain terms = the power source itself is not the bottleneck. The real challenge is delivering it around the clock — wind and solar output fluctuates, but chip fabs need uninterrupted supply.
How is grid and infrastructure build-out being accelerated?
KEPCO (Korea Electric Power Corporation) has set up a dedicated task force led by grid division head Kim Jae-gun to fast-track transmission construction and procurement.
The plan calls for new lines from the industrial park into KEPCO's existing grid, with a parallel review of current and planned cross-regional lines to ensure stable supply during renewable output dips.
The government pledged to cut the industrial-park development cycle to under five years — roughly half the current timeline — and to cover up to 100% of power and water infrastructure costs.
How large is the storage gap, and who is competing?
Korea's 11th power plan projects 23 GW of new long-duration storage nationwide by 2038, with procurement starting in 2026 — prioritizing grid-constrained areas including Honam.
Industry participants estimate the Korean storage market will exceed KRW 40 trillion; battery makers are retooling domestic lines to expand storage-cell output.
This means → the chip cluster is not just a semiconductor story — it pulls energy storage from "future roadmap" into "sign the contract now."
Who won what in the first procurement rounds?
Korea Power Exchange first storage tender: Samsung SDI secured 429 MW (76% share); LG Energy Solution secured 136 MW.
Second tender: SK On won 284 MW (roughly half the total), entering Korea's storage market for the first time; Samsung SDI took 202 MW, LG Energy Solution 79 MW.
In KEPCO's grid-stability program, LG Energy Solution swept the entire first-round contract of 1.4 GW; in the second round, LG Energy Solution and Samsung SDI each received 56 MW.
What is the real uncertainty hanging over this investment?
Vice Minister Lee Ho-hyun stated: "The core competitiveness of advanced semiconductor fabs lies in rapid access to stable infrastructure."
The government also established a Presidential Semiconductor Committee and a semiconductor innovation support body under the Semiconductor Special Act — clearing obstacles from the top down.
This reflects a national-project approach to chip infrastructure — but whether the KRW 896 trillion MOU converts into actual capital deployment, and whether storage procurement materializes on schedule, is the real test of this plan's credibility.
Content is for reference only, not financial advice.