SK Hynix Weighs Advanced Chip Packaging Plant in Gwangju or Muan

First Semiconductor Production Base in the Honam Region

Advanced District 3 a Leading Candidate; Ample Power a Key Advantage

SK Hynix is pursuing a plan to establish a semiconductor back-end production base in South Korea’s Honam region, including Gwangju and Muan in South Jeolla Province. It would mark the company’s first attempt to build a chip production site in the country’s southwest.

According to industry officials on June 12, SK Hynix has largely settled on building a back-end processing plant in the Honam region and is coordinating its final site selection. Gwangju and the Muan area are the leading candidates. The company is expected to discuss the plan later in June at a meeting of major business leaders chaired by the president at the presidential office, people familiar with the matter said.

SK Hynix initially considered having one of its suppliers build a plant in the Honam region as part of a broader effort to internalize its supply chain, a semiconductor industry official said. It later shifted to making a large direct investment of its own to respond to exploding global demand for high-bandwidth memory, or HBM, and to secure a leading position in the artificial intelligence chip ecosystem. The company has now decided to expand advanced packaging capacity as demand surges. It is conducting a final review of Gwangju’s Advanced District 3, which is being developed as a comprehensive science and technology industrial complex, and Muan, which offers a large site and logistics advantages including a nearby airport and port, the person added.

SK Hynix’s domestic back-end processing lines are currently concentrated at its Icheon campus in Gyeonggi Province. If the investment is finalized, the Honam region would become the company’s second domestic back-end production base after Icheon.

A key reason SK Hynix is considering the Gwangju area as a new hub is the Honam region’s ample power infrastructure. The area, which has a high concentration of solar and offshore wind facilities, is considered well suited to provide stable electricity to semiconductor plants, which consume large amounts of power. Tax incentives and regulatory easing tied to the government’s balanced regional development policy also appear to have strengthened the area’s appeal.

The investment also fits with SK Hynix’s broader strategy to expand global production capacity. The company plans to double its memory chip production capacity within the next five years. That makes securing an additional production base essential alongside the semiconductor mega-cluster under development in Yongin.

SK Group Chairman Chey Tae-won said at the Nikkei Forum in Tokyo on June 10 that semiconductor demand is rising so quickly that the company must keep building factories. He also signaled SK’s intent to expand infrastructure aggressively at home and abroad. Demand for semiconductors will continue to grow, and the company cannot avoid choosing new locations to prepare, he said. Any new site would need to have adequate power, water, land and labor.

An SK Hynix official said nothing has been decided yet.

Won Jong-hwan and Shin Jeong-eun, Hankyung.com reporters won0403@hankyung.com