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    SK hynix’s USD93.8B chip cluster project hits snag over water dispute

    ANN/THE KOREA HERALD – SK hynix’s KRW121.7 trillion (USD93.8 billion) plan to set up a semiconductor manufacturing cluster is facing an unexpected hurdle as the South Korean chipmaking giant is being denied a request for water usage from a city adjacent to the cluster’s location in Greater Seoul.

    The city of Yeoju, Gyeonggi Province, is demanding greater compensation in exchange for letting SK hynix build underground pipes needed to transport massive amounts of water crucial for producing next-generation chips in a brand-new semiconductor fabrication plant (fab) in Yongin, southern Gyeonggi Province.

    Yeoju Mayor Lee Choong-woo refused to grant the green light unless certain conditions are met, throwing SK hynix’s ambitious memory fab construction plans into a spiral of uncertainty.

    SK hynix is supposed to break ground on the 4.15-million-square-metre site in September, but without reaching an agreement with Yeoju City on water supply this month, the project is likely to be delayed, with insiders warning that it could cause cost overruns.

    The Yeoju water deal remains the last remaining obstacle SK hynix has to clear in building the nation’s first state-sponsored project. As of June, three years after the government announced the plan, SK hynix had obtained all the required government approvals and reached compensation agreements with landowners who would be affected by the pipeline and the factory.

    SK hynix’s semiconductor fabrication plant in Icheon, Gyeonggi Province. PHOTO: BLOOMBERG

    Under the current plan, the Yongin cluster looks to consume up to 570,000 metric tonnes of freshwater on a daily basis. Chipmaking requires large volumes of ultrapure water to remove debris during the manufacturing process to prevent the chips from becoming contaminated.

    SK aims to allocate about KRW300 billion alone to build the pipeline across Yeoju, which is more than 30 kilometres away from the chip factory location.

    A Yeoju City spokesperson claimed that the plan affects the city as a whole, since the pipelines would hamper other infrastructure and industrial land development planning.

    “(A new chip cluster project) is forcing (Yeoju) to make sacrifices,” Yeoju said in a statement.

    “Yeoju is calling for a plan where all parties concerned with the project can coexist, as Yeoju has long been under overlapping regulations and the water to Yongin means an additional layer of limitation to Yeoju‘s development.”

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