Scrapped Dams Threaten South Korea's Honam Chip Hub

South Korea's plan to build a massive semiconductor cluster in the Honam region faces a fundamental obstacle: there may not be enough water to keep the chips flowing.

The government-backed project, which has attracted investment commitments from Samsung Electronics and SK Hynix, requires an estimated 650,000 tons of water daily for fabrication operations. Yet critical infrastructure needed to supply that volume was canceled over the past two decades.

Six Dams, One Problem

Six dam projects in the Honam region—five multipurpose facilities and one dedicated water-supply reservoir—were scrapped across the Roh Moo-hyun, Moon Jae-in, and Lee Jae-myung administrations. Combined, those canceled projects represented 690,000 tons of daily water capacity, more than enough to meet the semiconductor cluster's needs.

"Although the government initially deemed the dams necessary, they were ultimately scrapped due to populist pressures like resident opposition," said Rep. Kim Wi-sang of the opposition People Power Party. "This has now returned as a boomerang, causing concerns over water shortages for the semiconductor cluster in the southwestern region."

Dongbok Dam Shortfall

The current government's contingency plan centers on raising the Dongbok Dam's height by 15 meters to secure an additional 300,000 tons of water daily. However, analysis based on current precipitation and runoff rates indicates this approach may fall short by 56,000 to 102,000 tons per day.

The underlying hydrology works against the region. The Yeongsan River basin, which serves the Honam area, currently supplies only 27% of its domestic and industrial water demand. The remaining 73% comes from the Seomjin River basin, leaving little surplus capacity for new industrial users.

Investor Confidence at Stake

Water is not a secondary concern for semiconductor fabrication. Chip plants require ultra-pure water in massive volumes, and any interruption can halt production and damage equipment. The uncertainty over long-term supply could deter the very investors the government is courting.

"A fundamental prerequisite for regional industrialization is stable power and water infrastructure," said Son Yang-hoon, emeritus professor of economics at Incheon University. "Given the planned operation of a large-scale semiconductor plant for decades, a mid- to long-term water strategy—including new reservoirs—must be established to reassure investors."

President Lee Jae-myung has publicly rejected claims of water shortages, framing the Honam cluster as a cornerstone of his administration's industrial decentralization agenda. But the math remains unforgiving: a region that canceled dams capable of storing 690,000 tons daily now needs to find 650,000 tons for a single industrial project, with existing infrastructure already running a deficit.

Regional Vulnerability

The water crunch extends beyond the semiconductor cluster. The Honam region has experienced recurring droughts, and industrial users have faced supply constraints. Without new reservoir construction or major reallocation from other basins, the government's chip hub risks becoming a stranded asset.

The timeline adds pressure. Semiconductor fabs take years to build and decades to operate. Investors need certainty that water will flow in 2030, 2040, and beyond—not just during the ribbon-cutting ceremony.