Korea's president demands faster permits for $576B chip push

Key Takeaways

• President Lee ordered simultaneous processing of permits to cut the 6-year timeline for chip projects
• Samsung and SK Hynix will each invest $260 billion in new southwestern fab sites
• Power supply concerns from chip makers are driving preemptive infrastructure planning

South Korea's President Lee Jae Myung told government officials Monday to stop processing chip project permits one step at a time and start running them in parallel. His message was blunt: the six years it took to break ground on the Yongin industrial complex is too slow, and bureaucratic delays in land, power, and water could cost Korea its lead in advanced semiconductors.

"In this situation, it appears the outcome will be decided by who moves faster and who secures the lead first," Lee said at a government meeting. "Only speed matters."

The urgency follows last week's announcement of more than $576 billion in combined investments targeting chip and AI industries. Samsung Electronics and SK Hynix are each committing 400 trillion won (roughly $260 billion) to build new manufacturing sites in southwestern Korea. Another 81 trillion won will go toward a chip-packaging cluster in the Chungcheong region.

What's slowing Korea's chip projects?

Lee pointed to environmental reviews, land acquisition, and approval sequencing as the main bottlenecks. The Yongin complex took six years from site confirmation to groundbreaking, and that was considered fast by Korean standards. For context, TSMC broke ground on its Arizona fab in 2021 and began equipment installation by late 2022, though that project has faced its own delays.

The president called for environmental reviews and other approvals to be shortened where possible, and for sequential procedures to run simultaneously. This is a significant administrative shift. Korean megaprojects typically move through a rigid checklist: first environmental review, then land acquisition, then utility planning. Lee wants those tracks to run at the same time.

Power supply is the bigger concern

Chip fabs are power-hungry. A single advanced semiconductor facility can consume as much electricity as a small city. Lee acknowledged that companies have raised concerns about baseload power supply, even as Korea expands renewable energy capacity. Renewables are intermittent; fabs need constant, reliable power.

Lee ordered officials to secure power and water infrastructure "preemptively," addressing company concerns before they become project blockers. This suggests the government is willing to commit public resources to utility buildout ahead of private investment. Whether that means new transmission lines, grid upgrades, or additional baseload generation remains unclear.

The competitive pressure behind the push

Korea dominates memory chips. Samsung and SK Hynix together control over 60% of global DRAM and NAND production. SK Hynix holds an estimated 80% of the market for High Bandwidth Memory, the specialized chips that power AI accelerators from Nvidia and AMD.

But competitors are closing in. The U.S. CHIPS Act is directing $52 billion toward domestic semiconductor production. Japan has restarted its chip ambitions with Rapidus. Taiwan's TSMC continues to expand. China, despite U.S. export controls, is pouring state money into memory chip development.

Korea's advantage is experience and scale. Its vulnerability is speed. If a competitor can build equivalent capacity faster, Korea's market share erodes. That's the math behind Lee's "only speed matters" directive.

What happens next

Lee told government officials and corporate executives to begin discussing specific sites for the new projects. This suggests that while the investment totals are set, the exact locations for some facilities are still being negotiated. Site selection affects everything from labor availability to supply chain logistics to political considerations about regional development.

The southwestern location for the Samsung and SK Hynix sites is notable. Korea's existing chip infrastructure clusters around the Seoul metropolitan area. Moving production southwest aligns with Lee's stated goal of encouraging growth beyond Seoul, distributing economic benefits more broadly.

Frequently Asked Questions

How much is South Korea investing in chip manufacturing?

South Korea announced over $576 billion in combined investments, with Samsung and SK Hynix each committing approximately $260 billion to new fab sites in the country's southwest region.

Why is President Lee pushing for faster chip project approvals?

Lee cited the six-year timeline for the Yongin complex as too slow, warning that delays in permits, land acquisition, and infrastructure could cost Korea its competitive position against the U.S., China, Japan, and Taiwan.

What infrastructure concerns are chip makers raising?

Companies have expressed concerns about baseload power supply for fabs, which require constant electricity. Lee ordered officials to address power and water infrastructure preemptively rather than waiting for projects to stall.

Where will Samsung and SK Hynix build their new chip facilities?

Both companies will build in southwestern South Korea, a departure from existing clusters around Seoul. An additional chip-packaging cluster will be built in the Chungcheong region.

Source: Tech-Economic Times / ET