[The Editors' Verdict] The National Assembly Must Swiftly Pass the K-Chips Act

Semiconductor Powerhouses Like the US, Taiwan, and Japan Support Domestic Industries with Government Intervention
South Korea's Proposed K-Chips Act Stalled in the National Assembly and Still Adrift
K-Semiconductor Outlook 'Red Light'?Pass the Bill

[Asia Economy Reporter Lee Cho-hee] "Most of the money is in the private sector. As long as they don't cause trouble, that's the support policy."

At a recent dinner with a senior executive of a domestic semiconductor company, the response to a question about the effectiveness of the government's semiconductor support measures was quite blunt.

He countered by citing cases from the U.S. and other countries, saying that if the government provides massive subsidies, research and development (R&D) could gain momentum. He said that most past governments have grandly announced 'support measures' gathered from various places, but ultimately, the responsibility to solve the issues rested entirely on the private sector.

This kind of lament is understandable. Just five months ago, Korea could have been called "a country of semiconductors, for semiconductors, and by semiconductors." Semiconductors emerged as the most important strategic material worldwide, and the U.S. president simultaneously threatened and pleaded with Samsung Electronics, a 'mere' Korean company. The Moon Jae-in administration belatedly promised full support for the semiconductor industry, and this stance has been maintained under the Yoon Suk-yeol administration.

Now, the global semiconductor war has expanded from company-to-company competition to competition between nations. Micron, a U.S. company far behind Taiwan's TSMC and Samsung Electronics?the world's largest foundry (semiconductor contract manufacturer)?recently announced plans to build the largest semiconductor factory in U.S. history. The investment is up to $100 billion (about 143 trillion won) over 20 years. This was made possible by the U.S. government's semiconductor support law (Chips and Science Act, CSA). Combining federal tax credits, subsidies, and state government support, nearly half of the investment can be supported by the government.

The Taiwanese government's devoted support for TSMC, which is ahead of Samsung, goes without saying. Since TSMC was established in the 1980s, the Taiwanese government has poured in support. They exempted corporate taxes through science parks and lowered loan interest rates. They generously provided R&D subsidies. They established industry-academia-research collaboration programs to attract talent, resulting in a cloud of semiconductor specialists flocking to the company. Even Japan, which had been dormant for a while, recently set up a 600 billion yen fund to kickstart the revival of its domestic semiconductor industry.

Turning our eyes to Korea, the president still emphasizes semiconductors, but it is nothing more than an "empty echo." Both ruling and opposition parties are engrossed only in low-level political strife despite the national crisis. The Semiconductor Special Act (K-Chips Act), proposed last August, is still drifting in the National Assembly.

Currently, K-semiconductors are facing a serious crisis. Samsung Electronics reported an operating profit of 10.8 trillion won in its preliminary Q3 earnings released on the 7th, down 31.73% year-on-year. The cause is attributed to price declines in DRAM due to oversupply. Although exact semiconductor segment results have not been separately released, it is estimated that Samsung Electronics, which ranked first in global semiconductor sales last year, has lost the top spot to TSMC. To overcome this weakness, Samsung must strengthen its foundry business, which requires astronomical investment. It is uncertain how long a private company alone can bear the investment of over 30 trillion won needed to build a single semiconductor factory.

In the ruthless semiconductor battlefield, the opponent is riding motorcycles, while we are floundering in the mud weighed down by lead. There is no law preventing Samsung from repeating the fate of Japanese semiconductors, which once swept the world but disappeared into history after being overtaken by Korea. Semiconductors are directly linked to future survival. It is time for the National Assembly to come to its senses before it is too late.

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