Ruling, Opposition Parties Clash Over Honam Semiconductor Project

President Lee Jae-myung, Samsung Electronics Chairman Lee Jae-yong, and SK Group Chairman Chey Tae-won shake hands after the announcement of corporate investment plans at the Three Major Mega-Projects National Report held at Cheong Wa Dae on June. 29. (Photo provided by Cheong Wa Dae Press Corps) The conflict between the ruling and opposition parties over the Honam Semiconductor Mega Project, worth a total of 800 trillion won (about $594.8 billion), has escalated into a dispute over adopting Samsung Electronics Chairman Lee Jae-yong and SK Group Chairman Chey Tae-won as witnesses for the parliamentary audit. The  opposition People Power Party argued that it must be verified whether the government unfairly intervened in the companies’ large-scale investment decisions, while the ruling Democratic Party of Korea countered that it is an attempt to drag the conglomerate heads into a political dispute. During the parliamentary audit of the Ministry of Employment and Labor by the Climate, Energy, Environment and Labor Committee of the National Assembly on October 13, lawmakers from the ruling and opposition parties engaged in a war of words over whether to adopt the business leaders as witnesses in relation to the Honam Semiconductor Mega Project. The Honam Semiconductor Mega Project, the center of the controversy, was announced at the National Report on the Three Mega Projects for the Great Leap of the Republic of Korea presided over by President Lee Jae-myung on June 29. It is a project in which Samsung Electronics and SK hynix will invest 400 trillion won each, totaling 800 trillion won, to build four semiconductor fabrication plants (fabs) around the Gwangju military airport. The government’s plan is to respond to the increasing demand for memory semiconductors driven by the proliferation of artificial intelligence (AI) and to expand the semiconductor production bases concentrated in the Seoul metropolitan area to the Honam region. The goal is to begin construction in 2028, complete the first plant in 2029, and enter mass production in early 2030. However, as the investment plan worth hundreds of trillions of won was announced at an event presided over by the president, political circles raised controversies over whether the companies made an autonomous investment decision. In particular, the fact that the large-scale investment plan was announced first, despite the need to secure infrastructure such as the relocation of the Gwangju military airport, site development, and the supply of power and water, remains a key point of contention. The People Power Party is raising the possibility that the government pressured the companies to invest in the process of promoting balanced regional development policies. On the other hand, the Democratic Party of Korea is protesting that the opposition is trying to put the conglomerate heads in the parliamentary audit arena by putting unverified suspicions at the forefront. On October 13, Representative Na Kyung-won of the People Power Party demanded the adoption of Chairman Lee and Chairman Chey as witnesses, stating, “Many citizens think that the Honam Mega Project started for the national convention of the Democratic Party of Korea and that the president called in the conglomerate heads and twisted their arms.” Representative Na argued, “Even for the Honam Mega Project to succeed, we must listen to the positions of the companies in detail and look closely at whether it is arm-twisting or not, and if it is not arm-twisting, what on earth needs to be done for them.” Representative Kim Wi-sang of the People Power Party also pointed out that the Democratic Party of Korea had demanded the attendance of conglomerate heads at parliamentary audits during its time as the opposition party in the past. Representative Kim asked back, “Is it political obstruction when the People Power Party calls them?” and criticized the ruling party’s opposition to the adoption of witnesses as a double standard. In response, Representative Shin Jeong-hoon of the Democratic Party of Korea countered that the demand for the attendance of the two conglomerate heads was intended to turn the parliamentary audit into a venue for political dispute. Representative Shin refuted the suspicions of the government’s pressure on corporate investment, saying, “The adoption of Chairman Chey Tae-won and Chairman Lee Jae-yong as witnesses sounds like nothing but an intention to use them as tools for political strife.” He continued to ask back, “Arm-twisting of companies was done by the Chun Doo-hwan administration, the Park Chung-hee administration, and the Roh Tae-woo administration, but when did the Democratic Party administration ever twist the arms of companies?” and raised his voice, adding, “Leave Honam alone so it can make a living too.” The issue of adopting the two chairmen as witnesses has been continuing since last month. The People Power Party demanded the attendance of Chairman Lee and Chairman Chey at the plenary session of the Climate, Energy, Environment and Labor Committee on Sept. 28 as well, but the ruling and opposition parties failed to reach an agreement. Apart from the political dispute, the companies’ investment preparations are also underway. On Oct. 9, Chairman Chey Tae-won personally visited the scheduled relocation sites for the Gwangju military airport and ammunition depot to inspect the conditions for the construction of the semiconductor plants. At the site, Chairman Chey mentioned the necessity of building the plants in Yongin and Honam in parallel, stating that semiconductor demand is increasing faster than expected. He also expressed his position that even if the supply of power and water is delayed, foundation work can proceed first. The government also resolved at a Cabinet meeting on Oct. 13 to establish the Semiconductor Innovation and Growth Support Group, which will be in charge of implementing the Semiconductor Mega Project and the Special Act on Semiconductors. The support group is a director general-level organization within the Ministry of Trade, Industry and Energy, and it will take on the tasks of policy support necessary for large-scale investments and fostering the semiconductor industry ecosystem.