Samsung Electronics' Semiconductor Cluster: Water and Electricity Challenges

Samsung Electronics, a leading electronic components manufacturer, recently announced its plan to invest 30 trillion Korean won (approximately 23.57 billion USD) in creating an advanced system semiconductor cluster in Longin City, Gyeonggi Province, South Korea. This development has generated anticipation within the electronic components distribution industry. However, the project faces uncertainties regarding the significant water and electricity requirements, as the South Korean government has yet to provide a clear solution.

According to reports from Seoul Economy, the Gyeonggi Province government held the second meeting of the "Gyeonggi Province Semiconductor Support Project Group" to discuss industrial water and electricity issues. It is estimated that the semiconductor cluster in Longin City will require a daily industrial water supply of 650,000 tons, surpassing Samsung's current total water consumption. The maximum daily electricity demand is projected to reach 7 gigawatts (GW), which accounts for 5% of South Korea's total power generation.

Industrial water supply poses a primary challenge for the Samsung semiconductor cluster, and the South Korean semiconductor industry believes there are no alternative solutions apart from sourcing water from the Batang Reservoir. However, the South Korean Ministry of Environment states that the remaining water in the Batang Reservoir is insufficient for the cluster's needs. To ensure a stable water supply, measures such as wastewater reuse and securing other water sources will be implemented.

In fact, SK Hynix, another company planning to establish a semiconductor cluster in Longin City, faced difficulties in obtaining water from the Batang Reservoir. As a result, they had to negotiate with Icheon City, causing a delay of one year and six months in the overall plan due to conflicts between the two parties. The estimated daily water consumption of SK Hynix's Longin semiconductor cluster is 265,000 tons, while Samsung's water demand of 650,000 tons per day presents an even more challenging situation.

Regarding electricity demand, the Ministry of Trade, Industry, and Energy of South Korea has established an innovation task force for the power grid and stated its intention to develop a power supply blueprint within 2023. However, the specific plans have not been made public yet.

The industry points out that the power supply capacity in Seoul and Gyeonggi Province is already saturated. While it is possible to enhance the power supply by constructing transmission towers in other regions, the Korea Electric Power Corporation, responsible for the country's transmission and distribution system, is facing a severe financial crisis and lacks the capacity for large-scale investments. In fact, in the past, there was a five-year conflict between Samsung's Pyeongtaek campus and the local government regarding the construction of transmission towers.

The semiconductor industry emphasizes that the inadequate core infrastructure and conflicts between businesses and local governments may result in a delay in the development of the nation's core industries. Some suggest that to address these issues, the government should establish a prioritization framework during the construction of industrial parks, empower regulatory authorities with strong oversight, integrate administrative capabilities, and institutionalize fundamental problem-solving mechanisms.