Yongin, a city of Gyeonggi Province south of Seoul, will become the new production base for the world’s second-largest memory chipmaker SK Hynix and the epicenter for semiconductor activity in an ambitious state-backed project to maintain Korea’s leadership in chipmaking against the fast rise of Chinese competition.

SK Hynix Inc., spearheading the planned project, said on Thursday that a special purpose company devoted to creating the biggest chip cluster has handed in its investment letter of intent to Yongin City on Wednesday.

A handful of local governments have been in a heated race to bring home the project that could value at 120 trillion won ($106.6 billion). SK Hynix with the last say on the choice has notified to the Ministry of Strategy and Finance, the Ministry of Land, Infrastructure, and Transport, and the Ministry of Trade, Industry and Energy.

Shares of SK Hynix ended Thursday 1.3 percent higher at 76,700 won.

The land offering is on the scale of 4.48 million square meters located in Wonsam-myeon in Cheoin District. The location was preferred for its vicinity to the capital area as it could be important in drawing talents and engineers from home and abroad and to create an ecosystem where large and small- and mid-size companies cooperate to boost the competitiveness of local semiconductor industry. The special-purpose company also considered connectivity to existing semiconductor sites across Icheon, Giheung, Hwaseong, and Pyeongtaek, all in Gyeonggi area, and Cheongju, North Chungcheong Province, and established infrastructures such as power, water, and roads for use.

Once the location is confirmed for the proposed semiconductor project, SK Hynix plans to invest a total 120 trillion won after 2022 to build four fabrication plants in the cluster. About 50 materials suppliers from home and abroad will also move into the hub, creating a synergy effect.

Major cities in Korea, including Yongin, Icheon in Gyeonggi, Cheongju, Cheonan in South Chungcheong Province, and Gumi in North Gyeongsang Province, have been vying to host the semiconductor cluster. Cities that are expected to be eliminated are protesting to the latest proposal for the site, saying that it goes against overall decentralization regulation.

SK Hynix, meanwhile, said it will continue to invest in its manufacturing bases in Icheon and Cheongju. The company plans to invest a total 35 trillion won including 20 trillion won in its site in Icheon to build a new semiconductor fabrication plant called M16 and a research development complex and expand facilities of the M15 production line that has been in operation since last year in Cheongju, North Chungcheong Province. The company plans to sign a memorandum of understanding with Cheongju City and North Chungcheong Province next month for land purchase to build a new plant in the city.

By Lee Sang-duk and Lee Eun-joo

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