GWANGJU, South Korea -- Ten years ago, Jeong Ji-seong plowed his energy and tech business savvy into founding a sensor startup in his beloved home city near the southwestern tip of South Korea, 300 kilometers from Seoul.

From its base in a factory on the outskirts of Gwangju, Jeong's firm, SOS Lab, has flourished. Revenue this year is expected to jump to 17.2 billion won ($13 million) last year, sharply up from 1.22 billion won in 2021, and it currently employs around 150 people.

Sketching out his vision of a bright future, a bullish Jeong spins in his office chair to explain the new automotive sensors he's working on that can give drivers 360-degree views.

But Jeong, 40, is unique among business leaders in South Korea. He chose to keep SOS Lab based in his hometown, instead of relocating to the brighter lights of Seoul and the main tech hubs to the south of the capital, where giants Samsung Electronics and SK Hynix operate major production sites.

Gwangju's domestic profile is as an underdeveloped region best known for agriculture -- and a tradition of political defiance, epitomized by the deadly suppression of protests there in 1980, fomenting a fierce progressive sensibility that persists to this day.

SOS Lab CEO Jeong Ji-seong, a Gwangju native, says he is determined that his business will remain headquartered in the city.

Come what may, Jeong insists, SOS Lab will remain headquartered in this out-of-the-way city, home to just over 1.4 million people. "Our heart is in Gwangju," Jeong told Nikkei Asia.

Now he is hoping a 1,600 trillion won ($1.2 trillion) plan unveiled by South Korean President Lee Jae Myung in June will mean multiple tech entrepreneurs relocating to Gwangju, ending what observers describe as decades of neglect by the central government and making Jeong's home region the nation's next high-tech hub.

For Lee, the future success of Asia's fourth-largest economy could depend on what he calls three long-term "megaprojects," featuring investment from Samsung Electronics and SK Hynix. The anchor of the three projects is a plan for a massive chip hub near Gwangju. The others are new data centers and manufacturing of "physical AI," such as robotics.

See also South Korea confronts 'growth without jobs' as chip profits surge These projects, for which there is no fixed time frame, could also define left-leaning Lee's legacy as his country's leader, economists say. Lee, 62, is nearly 17 months into his single five-year term, and his approval ratings now hover around 37%. He won nearly 50% of the vote in the June 2025 presidential election.

Lee has talked of the need to address the imbalanced "K-shape" of his country's economy. A few high-flying, export-oriented industries are thriving, while the country's main streets and households suffer, weighed down by stagnant wages and rising housing prices.

The president aims to leverage proceeds from the current boom in demand for semiconductors, fueled by the expansion of AI infrastructure around the world, that has propelled South Korean tech company earnings and valuations to dizzying heights this year. For Lee, the goal is to invest in beefing up production capacity and lay the foundations for future growth engines.

The megaprojects amount to "a forward-looking investment" in preparing for success in manufacturing various forms of AI-related hardware, said Kwon Seok-joon, an associate professor of chemical engineering at Sungkyunkwan University.

"If demand continues to exceed expectations, there will be chokepoints in semiconductor supplies, so to solve that, this kind of investment is necessary," Kwon told Nikkei Asia.

Still, South Korea faces stiff competition in the race for supremacy in the tech business, with both China and the U.S. devoting abundant resources to establishing their own tech ecosystems.

Goldman Sachs estimates global AI spending this year alone could top $1 trillion, with the U.S. alone accounting for $581 billion. China doesn't publish a unified figure for state and private investment in AI, but Chinese internet giants like Alibaba and Tencent earlier this year said they planned to boost AI investment to a combined $84 billion in 2027, up 60% from 2025.

Lee has conceded that a long road remains to building, powering and staffing an advanced facility in a faded, shrinking city. The decision to anchor his vision in Gwangju raised eyebrows and spurred accusations by conservative political opponents of favoritism, as Gwangju is a traditional left-wing stronghold.

A man passes a disused building in the South Korean city of Gwangju, where signs of economic decline are impossible to miss, on Oct. 14.

Throughout South Korea's economic boom in the 1970s and 1980s, the Gwangju area received far less economic support than the neighboring southeast, which was the home region of both Chun Doo-hwan and Park Chung-hee, the right-wing military dictators who ruled throughout those decades. The uneven allocation of resources created a regional imbalance that remains today, Korea watchers say, with the southeastern cities of Ulsan and Busan rich in industry while Gwangju lacks sources of well-paying jobs. That history of resentment over the government in Seoul has fostered a sense of fierce mistrust of conservative leaders and the nation's business-minded elite.

Observers have raised the possibility that having the government be closely involved in such large corporate investments could lead to less-than-optimal allocations of funds. A more prudent approach, they argue, would be to allow the companies room to chart their own courses. South Korean President Lee Jae Myung, center, and Samsung Electronics Chairman Lee Jae-yong, right, bow to each other as SK Group Chairman Chey Tae-won observes after a briefing announcing the government's three megaprojects, in Seoul on June 29.

The wording of the government's megaproject announcement presented the investments by Samsung Electronics and SK Hynix as firm pledges.

The firms themselves used less committal expressions and did not specify the amount they had agreed to invest, leading to speculation that the chipmakers were notg up until a clearer picture of the megaprojects has emerged. Samsung Electronics declined to comment on how the plan might proceed.

SK Hynix did not respond to a request for comment. To ensure success, the Lee administration ought to clarify that it will play a supporting, rather than leading, role, according to Chung Un-chan, an economist and former prime minister.

A parcel delivery worker is pictured in Gwangju in November 2020.

Residents say the city has long been neglected by the central government. "Rather than interfering with the size or location of the companies' factories, it is desirable for the government to focus on providing new social overhead capital, such as power transmission networks, water supplies, data sharing and computing infrastructure," Chung told Nikkei Asia.

The lingering lack of clarity has led to calls on the government for a more decisive explanation of how the ventures will come together.

A coalition of civic groups released a statement on Oct. 12 complaining that, "Three months have passed but the government still has not released details about what advance assessment procedures they conducted and whether they adequately considered the risks of AI-related industries such as semiconductors."

Data center development in the U.S. and countries in Asia has become a focus for protests by local residents about the impact of such facilities on the environment, water supplies and power infrastructure. The outskirts of Gwangju will be the centerpiece of one of South Korea's three new tech megaprojects. South Korea's Ministry of Trade, Industry and Resources said that Lee's megaprojects are not solely a bet on the highly cyclical chip industry.

"The megaprojects are not a one-off undertaking, but a mid- to long-term project that continuously develops and expands the nation's strategic industries through private investment," an official at the ministry said. The decision to go all-in on semiconductors and other high-tech areas "makes strategic sense" at the moment, said Stefan Angrick, a senior economist and associate director with Moody's Analytics.

"Identifying growth sectors right now is really hard because of this kind of K-shaped pattern," Angrick told Nikkei Asia.

"The only thing that's doing really well at the moment is AI ... but it's also true that the gains from those industries accrue to a very narrow segment of the economy, so [the megaprojects are] not going to make that K-shape go away," he added.

If anything, some see the K-shape becoming more pronounced. A recent note by Morgan Stanley economist Kathleen Oh concluded, "[T]he state of the corporate sector and SMEs (small and medium-sized enterprises) appears to have worsened gradually."

The delinquency rate for SMEs hit its highest point in a decade as of July, with the corresponding rate for bigger corporations having shown a more modest increase. Oh recommended policymakers pay further heed to what she called "the lower K," referring to lower income households and wage-dependent earners.

"[T]he vulnerabilities of the weak segments need further monitoring and targeted support especially from the fiscal side given ample resources," according to Oh. Along with fostering general prosperity in the country, Lee hopes to bring resources and attention to a long-neglected part of the country.

Gwangju's population has been shrinking for years as young people relocate to the Seoul area seeking better job opportunities. South Jeolla, the province that surrounds the city, has 16 municipalities that have been designated as being at risk of depopulation, the most of any of the country's nine provinces. A concrete wall in an abandoned lot in Gwangju is graffitied with text that reads, "Gwangju is not over." Signs of economic decline are impossible to miss in Gwangju.

Even in the city's commercial core, many storefronts are vacant and lots on major thoroughfares sit empty. In a glimpse of the city's siege mindset, in one abandoned lot, behind piles of waste, a concrete wall is graffitied with text that reads, "Gwangju is not over." Gwangju is most widely known for being the site of one of the most tragic episodes in contemporary South Korean history. In 1980, military strongman Chun Doo-hwan dispatched troops to violently put down protests in the city, causing 162 deaths Unofficial estimates put the death toll much higher. The legacy of that incident is ubiquitous in Gwangju today.

Memorials and commemorative facilities are scattered throughout the city, many featuring the numbers "5.18," referring to the May 18 start of the fatal clampdown. "When you go to Gwangju, it really feels like you're in a different country, compared to the cities of the southeast," said Sung Won Sohn, a business professor at Loyola-Marymount University who grew up in Gwangju.

A memorial to victims of a 1980 massacre in Gwangju.

The legacy of the incident still looms large in the city. Sohn argues that the megaprojects stand to provide a needed boost to the small firms in and around Gwangju.

"The companies leading those big ventures will all need to work with local suppliers, they'll all eat in local restaurants, visit local parks," Sohn said. At SOS Lab, CEO Jeong insists Gwangju is no backwater.

The city is home to a few well-regarded technical universities, and South Korea's two main automakers, Hyundai and Kia, operate factories there. He maintains that the goal of his firm, and of South Korean firms generally, is to sell to the world.

Where they set up shop in the country is nothing to agonize over, he said, especially since Gwangju is only about two hours from Seoul by train. "Only Koreans think Gwangju is far from Seoul; anyone who is from another country would consider it close," Jeong said.

"You can have breakfast in Gwangju, lunch in Seoul, then dinner in Gwangju."