Semiconductor Industry "Welcomes Government Support Measures... Disappointed by Only 2%p Increase in Tax Credit Rate"

[Asia Economy Reporters Sunmi Park and Chaeseok Moon] The semiconductor industry has welcomed the government’s announcement of the ‘Strategy to Achieve Semiconductor Superpower Status,’ which includes strengthened tax benefits for facility investments and government-funded infrastructure support to enable investments worth 340 trillion won over the next five years. However, some expressed disappointment over what they perceive as somewhat passive support.

According to the ‘Strategy to Achieve Semiconductor Superpower Status’ announced by the government on the 21st, the tax credit rate for semiconductor equipment investments by large corporations will be raised by 2 percentage points to 8-12%, aligning it with that of mid-sized companies. The scope of national strategic technologies eligible for tax credits will also be expanded beyond advanced process equipment to include test equipment and intellectual property (IP) design and verification technologies. The floor area ratio (FAR) for semiconductor complexes will be increased from the current 350% to 490%, a maximum 1.4-fold increase. As a result, the number of clean rooms (production facilities free of dust and bacteria) will increase from 12 to 18 in Pyeongtaek and from 9 to 12 in Yongin, respectively.

The semiconductor industry has sent a welcoming message regarding the government’s proactive support for corporate investments under this policy direction. An industry official said, “We basically welcome the government’s measures,” adding, “We view positively the fact that broad support across the semiconductor sector, including manpower, tax, and research and development (R&D), has been considered.”

Expectations were particularly high regarding the increase in the floor area ratio for semiconductor complexes. An industry insider said, “Since we cannot utilize vast land like in the U.S., maximizing production capacity within a single factory is beneficial for semiconductor companies,” adding, “The increase in FAR allows for taller buildings, which can increase the number of clean rooms and thereby strengthen production capacity.” Another industry official also stated, “The increase in the FAR for semiconductor complexes is a direct and practical measure that benefits the semiconductor industry,” and added, “The extent of the FAR increase is at a satisfactory level.”

However, the decision to raise the tax credit rate for large corporations’ facility investments in national strategic technologies, including semiconductors, by only 2 percentage points drew criticism for being insufficient. An industry representative said, “The tax credit rate the semiconductor industry expected was around 20-40%. Compared to other countries that are actively fostering the semiconductor industry, the tax credit rate is relatively low,” and added, “We hope for further broad consideration on this matter.”

The Federation of Korean Industries also commented through its head of the Industrial Headquarters, Hwanik Yoo, stating, “The government said it would raise the tax credit for large corporations’ facility investments from the existing 6%-10% by 2 percentage points to 8%-12%,” and pointed out, “Considering that the U.S. is pushing for a tax credit of up to 40% on semiconductor facility investments, a corresponding increase in the tax credit rate is necessary.”

Some also expressed regret that the government has yet to present clear directions or responses on current issues troubling the semiconductor industry, such as the ‘Chip 4 Alliance’ and opposition from regional universities regarding semiconductor workforce training plans.

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