Frustrated Korean Semiconductor Industry... "Politics Are Too Much" (Comprehensive)

Yoon Emphasizes Semiconductors Again, Saying "Life or Death"
Political Circles Haven't Even Proposed the 'K-Chips Act'

Yang Hyang-ja, Chairperson of the Special Committee for Strengthening Competitiveness in the Semiconductor Industry. / Photo by Yoon Dong-ju doso7@

[Asia Economy Reporter Han Ye-ju] "The semiconductor industry is a matter of life and death for us." (On the 14th, at a luncheon with the People Power Party's Special Committee on Strengthening Semiconductor Industry Competitiveness, President Yoon Suk-yeol)

As President Yoon Suk-yeol once again emphasized support for the semiconductor industry, criticism is mounting over the political sphere's 'ignore-it' attitude. Contrary to President Yoon's determination, who has identified semiconductor development as one of the core tasks since before his inauguration, the domestic political arena has been solely focused on political strife without even submitting the 'K-Chips Act (Semiconductor Special Act).' While competing countries such as the U.S. and China are providing massive financial and policy support to protect and foster their semiconductor industries, concerns are rising that Korean semiconductor companies' competitiveness may deteriorate due to the backward behavior of the political sector.

According to business circles and political sources on the 15th, President Yoon said at a luncheon with Special Committee Chair Yang Hyang-ja and other committee members the day before, "Semiconductors are the rice of industry and an important field in the Fourth Industrial Revolution," adding, "As president, I must always prepare for the nation's future food sources, and semiconductors are not just a long-term task but a real-time issue that requires immediate response."

Although President Yoon emphasizes a 'speed race,' the K-Chips Act proposed by the Semiconductor Special Committee is struggling to gain momentum.

Earlier, the K-Chips Act, jointly proposed by Chair Yang on July 4, consists of two bills: the 'Amendment to the Special Measures Act for Strengthening and Protecting National Advanced Strategic Industry Competitiveness' and the 'Amendment to the Restriction of Special Taxation Act.' The core of these bills is to exempt advanced industries such as semiconductors from preliminary feasibility studies, shorten permit processing periods, and provide various tax benefits to companies.

However, the opposition party has stalled progress by raising issues about the deliberation period. The review criteria set that bills must be proposed by July 15, preventing the bills from being brought to the standing committee. Members of the People Power Party in the Industry, Trade, Energy, Small and Medium Enterprises Committee proposed applying exceptions to the Semiconductor Special Act amendment considering the global crisis, but the opposition party opposed it. Various other bills aimed at providing faster infrastructure and supporting talent development for semiconductor companies were also excluded from the agenda.

Currently, unlike other countries where the government naturally takes responsibility for water and electricity supply when establishing new factories, in Korea, companies must pay premiums to resolve these issues themselves. The Yongin cluster project, in which SK Hynix planned to invest as much as 120 trillion won but is currently stalled, is a representative example.

This sharply contrasts with the United States, which has been rapidly processing domestic industry protection laws. The U.S. Democratic Party, unable to reconcile differences with the Republican Party over the Chips and Science Act (CSA) that provides substantial benefits to domestic semiconductor companies, separated the core support measures into a revised bill. This law was passed swiftly by both the House and Senate in July and was signed by U.S. President Joe Biden on August 9. The Inflation Reduction Act (IRA), which supports domestic electric vehicles, passed the Senate on August 7, the House on August 12, and was signed by the president on August 16, taking less than two weeks for final processing.

China is also pouring national-level support to complete its semiconductor rise, and Japan has prepared an additional supplementary budget of 774 billion yen (approximately 7.4 trillion won) this year to support the semiconductor industry.

Experts point out that the semiconductor industry is one where the later the decision, the weaker the competitiveness. An industry insider said, "The subsidy laws introduced by major countries are significant constraints on the competitiveness of our export-dependent companies," adding, "The Semiconductor Special Act must be pushed forward as soon as possible to foster the semiconductor industry, which has emerged as a core resource for national security."

Chair Yang urged President Yoon to actively support the swift passage of the K-Chips Act in the National Assembly. Chair Yang said, "The semiconductor industry is characterized by rankings that change every minute and second. Experts are anxious every day to maintain hegemony," and requested, "To protect technological hegemony, both the ruling and opposition parties and President Yoon should take an interest in the bill's passage in the National Assembly."

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