Small modular reactors (SMRs) are emerging as a power alternative for semiconductor clusters. Electricity needs are rising as new chip plants are built, while the government is reducing coal and LNG generation. SMRs can supply steady power around the clock, making them a nuclear option seen as suitable for semiconductor plants. Still, matching supply timing is a challenge because the first SMR in South Korea is expected to come later than the completion of semiconductor fabs.

The industry is reviewing a plan to build SMRs near semiconductor plants to supply power, industry sources said on Wednesday. An SMR is a nuclear plant that uses reactors smaller than large-scale nuclear units, with parts manufactured like components at factories and assembled on site. Because an SMR can be built on a small site, it can be located close to where electricity is used. That raises the likelihood of use near semiconductor fabs that run equipment all day and consume large amounts of power. Yuanta Securities analysed that as demand rises for AI data centres and semiconductors, securing stable power will become more important.

In South Korea, newly planned semiconductor clusters in Yongin and the southwest need power supply immediately. SK Hynix's Y1, the first fab in the Yongin cluster, has already passed 80 percent completion. The government also moved up the schedule for building the power grid for the southwest semiconductor cluster. But plans for transmission lines to send electricity to the Yongin cluster have run into opposition from residents along the route. Yuanta Securities said power demand projections rose sharply during the process of drafting the government's mid- to long-term plan, the 12th Basic Plan for Electricity Supply and Demand, as it reflected semiconductors and AI data centres.

In contrast, thermal power plants are declining. Climate, Energy and Environment Minister Kim Sung-hwan (김성환) said in January the government would eliminate coal power by 2040 and run LNG generation only for emergencies. That is why SMRs are being mentioned as a candidate to fill the gap left by shrinking thermal generation.

SMRs are seen as a candidate power source for semiconductors because they can produce the same amount of electricity 24 hours a day. Semiconductor plants use electricity all day without stopping their processes. The Nuclear Safety and Security Commission also said in an August work report that the need to supply stable power on time has surged because of the semiconductor and AI industries. Once a nuclear plant starts operating, it maintains steady output as baseload power. Renewable energy, by contrast, has fluctuating generation and must be supplemented with energy storage systems and pumped-storage hydropower. Nuclear output is steady regardless of weather, aligning with how semiconductor plants use electricity.

Overseas, projects are under way to use SMRs as industrial power sources. SMR developer X-energy said it would begin a feasibility review with power company American Electric Power (AEP) on a project to build an SMR complex in Indiana. Amazon will fund the development. The two companies aim to bring SMR facilities into the U.S. power grid by 2039. In South Korea, SK Innovation is pursuing TerraPower's Natrium reactor project in the United States, targeting construction in the early 2030s.

Still, the schedule indicates South Korea's first SMR can begin operating only after all Yongin semiconductor fabs are completed. SK Hynix plans to build four fabs in the Yongin cluster by 2033. The commission said one domestic SMR demonstration unit included in the 11th Basic Plan for Electricity Supply and Demand has a target of being built by 2035. That means there may be a situation in which SMRs must be awaited even after the semiconductor fabs are finished.

The SMR timeline has not been finalised either. The government-led innovative SMR (i-SMR) is undergoing design approval review, and an application for a construction permit is scheduled for 2028. The commission will work through 2030 to revise the licensing system, which is tailored to large nuclear plants, to fit SMRs. It has also not been decided how much to include SMRs in the 12th basic plan. An industry official said, "In the early stage of operating semiconductor clusters, power will be connected through transmission networks and existing power plants, and only after that will SMRs be used as a power source."