Business Community Bridges 'Alliance Restoration'... Now It's Time for the Government to Respond

Unified Call for Government Policy Support to Boost Corporate Investment Vitality
Eliminate Anti-Business Sentiment and Regulations, Encourage Industrial Promotion
Also Advocating Progressive Review of Lee Jae-yong's Pardon

[Asia Economy Reporters Kim Hyewon, Kim Heungsun, Woo Sooyeon] As the total investment gift of 44 trillion won announced by the four major conglomerates was highlighted as the highlight of the Korea-US summit, voices are emerging that government policy support is needed to revive the vitality of domestic and foreign investment by companies.

According to the business community on the 24th, Samsung Electronics confirmed a plan to invest $17 billion (about 19.2 trillion won) in semiconductor foundry production in the US on the occasion of the Korea-US summit, and domestic semiconductor materials, parts, and equipment (SoBuJang) companies are also rejoicing as new market entry opportunities have opened.

Samsung Electronics plans to expand its extreme ultraviolet (EUV) foundry production line with the largest-ever single investment, and partner companies supplying SoBuJang for advanced processes below 5nm are also expected to participate in the line construction. Austin, USA, where the foundry plant has been operating since 1997, is a strong candidate site, but the site has not yet been decided due to fierce competition for attraction, including New York State offering tax benefits exceeding $900 million.

The new US foundry production line is expected to have a higher localization rate than the existing Austin plant, making technological capability essential. SoBuJang companies that participated in the construction of the Pyeongtaek 2nd plant (P2) foundry production line, scheduled to operate in the second half of this year, are reportedly showing a proactive stance toward entering the US market around the Korea-US summit. Kim Kyungmin, a researcher at Hana Financial Investment, predicted, "If domestic SoBuJang companies diversify their product supply records through Samsung Electronics' advanced US foundry production line, the possibility of supplying products to global foundry customers including Intel will increase accordingly."

Our government has belatedly introduced semiconductor industry activation policies, including localization in the semiconductor SoBuJang sector, but there are criticisms that it is insufficient. Professor Hong Kiyong of Incheon National University's Department of Business Administration emphasized, "Leading companies are responding to international competition with cutting-edge technology," adding, "Active deregulation and tax support from the government for (our companies') research and development are necessary."

Samsung Electronics' long deliberation in searching for a factory site in the US is because unprecedented incentives are the top priority in investment decisions. SK Hynix has decided to invest $1 billion to build a large-scale research and development center for innovation in new growth areas including artificial intelligence in Silicon Valley, USA. In the domestic and international economic circles, opinions continue to emerge that a pardon for Samsung Electronics Vice Chairman Lee Jae-yong is necessary to establish a semiconductor ecosystem led by Korea and the US.

The situation is similar for batteries, which are a core pillar of investment in the US along with semiconductors. SK Innovation plans to establish a joint venture with Ford, the second-largest automaker in the US, and build two cell and battery plants in the US with an investment of about 6 trillion won. Assuming equal investment, SK's expenditure alone reaches 3 trillion won. The joint venture BlueOvalSK between SK and Ford is expected to be established in the second half of this year, but the specific factory site and investment timing are undecided. However, considering Ford's electrification strategy and the mass production of electric vehicles around 2025, construction for the battery plant is expected to begin by 2023 at the latest.

LG Energy Solution plans to decide on two new factory candidate sites in the first half of this year. The amount spent here exceeds 5 trillion won by 2025. It also plans to invest about 2.7 trillion won in a joint factory with General Motors (GM). LG and GM's first joint factory is under construction in Ohio. It will start operation next year, and the second factory is planned to be built in Tennessee with operation targeted for the following year.

Professor Hong said, "It is first important for global companies to grow further and gain international competitiveness," adding, "Only then will they pay more taxes domestically and have the capacity for reinvestment. The investment by our companies in the US through this Korea-US summit is a good example of timely utilization in strategic businesses such as semiconductors, batteries, bio, and artificial intelligence." Especially, since the US electric vehicle market is a difficult market for China’s CATL, the world's number one battery manufacturer, to enter, there are strong voices that our companies should preemptively secure the market backed by their own technological competitiveness and government support.

Hyundai Motor Company also officially announced the expansion of investment in the US. Hyundai plans to invest $7.4 billion in the US by 2025 in future mobility sectors such as electric vehicle production and charging infrastructure expansion. This accounts for about 10% of the group's total investment plan during the period. Kim Jinwoo, a researcher at Korea Investment & Securities, said, "The Joe Biden administration is focusing various benefits and support on US-made electric vehicles, increasing the need for local production," and added, "To strengthen cooperation with local IT companies such as Google, Apple, and Amazon in future cars, it is advantageous to have the latest facilities in the US."

Our government plans to actively promote domestic policy support related to key industries such as semiconductors, batteries, and future cars to support corporate investment in the US. During his tour, Minister of Trade, Industry and Energy Moon Seungwook held a separate meeting with US Secretary of Commerce Gina Raimondo and agreed on the necessity of policy support where the governments share the risks involved in corporate investment and promised cooperation.

Lee Sowon, head of the International Cooperation Team at the Federation of Korean Industries, said, "We need to actively request the US side to amend Section 232 of the Trade Expansion Act, which has troubled Korean companies," and added, "(To strengthen the economic alliance between the two countries) there must be more US corporate investment in Korea, and the government should strive to improve Korea's business environment."

This content was produced with the assistance of AI translation services.