[2022 National Audit] "Government Did Not Include Budget for Semiconductor Design Center Construction... Essential for Fabless Industry Development"

Yang Hyang-ja "Korea's market share only 1%... Special measures needed to foster fabless industry"

Interior photo of the Semiconductor Design Support Center. It looks empty due to many employees leaving. (Photo by Yang Hyang-ja)

[Asia Economy Reporter Moon Chaeseok] The government has come under fire for completely cutting the 2 billion KRW budget for the construction of a new semiconductor design support center (innovation center). More than half of the companies residing in the existing design support center (center) have set up external offices due to lack of space, raising criticism that the government, which has made "semiconductor promotion" its banner, is neglecting the center.

Detailed breakdown of the 2 billion KRW budget for the establishment of the Semiconductor Innovation Design Support Center. (Source: Office of Assemblywoman Yang Hyang-ja)

According to data received by independent lawmaker Yang Hyang-ja of the National Assembly's Industry, Trade, Energy, Small and Medium Enterprises Committee from the Ministry of Trade, Industry and Energy on the 18th, the government did not allocate any of the 2 billion KRW budget for the new "Artificial Intelligence (AI) Semiconductor Innovation Design Center" in next year's budget proposal. Lawmaker Yang explained that the innovation center is an essential facility not only to resolve the space shortage of the existing center but also to support fabless (semiconductor design) companies that have entered a stable phase after startup.

South Korea's fabless global market share is only 1%, and the industry is raising strong voices about difficulties competing with advanced countries such as the United States and Taiwan, but the government has turned a blind eye to this. Lawmaker Yang emphasized, "Among the world's top 50 fabless companies, only one Korean company, LX Semicon, is included," adding, "It is a situation that requires drastic measures to nurture the fabless industry ecosystem, which has remained at about 1% global market share for three years."

Differences between the existing center (left) and the Innovation Center. (Source: Office of Assemblywoman Yang Hyang-ja)

According to Lawmaker Yang, the system semiconductor company office space support project is a program that supports office space for early-stage fabless companies to strengthen their design and production competitiveness. Currently, the center only supports office spaces for up to eight people. There have been continuous criticisms that this does not reflect the reality of rapidly growing fabless companies in their early stages. In the past three years, seven out of 20 companies residing in the center have moved out due to space shortages caused by workforce expansion. Among the nine remaining resident companies, six have increased staff, with some employees working at the center while the majority work in separately rented spaces.

Earlier, on July 21, the Ministry of Trade, Industry and Energy announced through the "Strategy to Achieve Semiconductor Superpower Status" that it would newly build an AI innovation center with an area of 1,000 pyeong (approximately 3,306㎡) capable of accommodating up to 20 employees within the Second Pangyo Global Biz Center in Seongnam, Gyeonggi Province. According to the lawmaker's office, the 2 billion KRW budget for the new innovation center was not reflected at all in next year's budget proposal. It is said to be because the Korea Semiconductor Industry Association and companies are expected to bear all the facility construction costs. Although a plan was prepared for the government to cover 1.2 billion KRW and the association 800 million KRW for the center construction costs, it has not yet been included in next year's budget proposal, which requires parliamentary review.

Lawmaker Yang raised her voice, saying, "I will strive to have the innovation center construction budget, which was cut this time, reinstated during the budget review process to provide effective support for rapidly growing fabless companies."

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