$88-billion Yongin chip-cluster agreement signed

Economy

Published: 21 Nov. 2022, 16:04 Updated: 21 Nov. 2022, 18:16

$88-billion Yongin chip-cluster agreement signed

From left, Lee Han-joon, LH CEO, Lee Chung-woo, Yeoju City Government mayor and Kwak Noh-jung SK hynix CEO, at the signing ceremony at the National Assembly in Yeouido on Monday along with other attendees including lawmakers and Minister of Trade, Industry and Energy Lee Chang-yang. [YONHAP]

SK hynix, Land & Housing Corp. and the Yeoju government on Monday signed a mutual cooperation agreement for the building of a semiconductor cluster in Yongin, Gyeonggi.

In 2019, SK hynix announced a 10-year, 120-trillion-won ($88 billion) project to build the nation’s biggest semiconductor cluster on 4 million square meters in Yongin. In addition to SK hynix, about 50 suppliers are planning to set up shop within the cluster.

Production is scheduled to start in 2027.

Proponents of the cluster say it will create 188 trillion won of economic activity and at least 17,000 jobs.

The development has been held back by opposition from the Yeoju government.

While the majority of the infrastructure, including the power grid, has been approved by the Yeoju city government, the water supply system approval request made in May last year was rejected.

The semiconductor plant is expected to use 265,000 tons of water a day.

The Yeoju government also raised questions about central government regulations protecting the region's water and limiting local development. It is particularly worried about rice farms.

Yeoju is a famous rice farming community. In 2006, it was designated by the government as the country’s first special rice industry zone.

“One cannot demand sacrifice from one side,” argued Yeoju mayor Lee Chung-woo during a public hearing in July, saying that if the water is taken, something must be offered.

According to the Ministry of Trade, Industry and Energy, the government created a special team in August to negotiate the issue between the semiconductor manufacturer and the city government. The People Power Party has assisted.

The government has agreed to review the relaxing of regulations regarding building or expanding production plants in Gyeonggi.

Current regulations limit plant construction or expansion to 1,000 square meters in most cases in Seoul, Gyeonggi and Incheon. That bar could be raised to 2,000 square meters.

The government will be supporting water-quality conservation projects, especially the Paldang reservoir.

SK hynix has agreed to support lower-income household and rice farmers. It will also support hiring within the community.

“With the agreement, the Yongin semiconductor cluster, the country’s biggest industrial complex, is now finally on track,” said Lee Chang-yang, Minister of Trade, Industry and Energy, who attended the signing ceremony.

“The semiconductor industry is currently facing difficulty amid inflation and interest rate increases,” the minister added. “But in the time of crisis, it is important that a preemptive investment should be made for the future.”

The minister added that the government will work with the National Assembly in reforming the National Advanced Strategic Act, which allows the president to issue executive orders for the approval of industrial complexes unless there are specific reasons to oppose it.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]