US Semiconductor Industry Launches Record-Breaking Investment... Korea's Efforts Seem All Talk

US Micron to Invest $100 Billion to Build Large-Scale Semiconductor Plant in New York
K-Chips Act Proposed in August Remains Stalled in National Assembly

Micron, a US memory semiconductor company logo image
[Image source=Yonhap News]

[Asia Economy Reporter Moon Chaeseok, New York=Special Correspondent Joselina] Micron, the largest memory semiconductor company in the United States, is building a large-scale semiconductor factory in New York. The total investment is $100 billion (approximately 143 trillion KRW), marking a record-breaking scale. Backed by the Biden administration's semiconductor support law (Chips and Science Act·CSA), the production base will be established on the mainland. Meanwhile, South Korea, where President Yoon Seok-yeol has been pushing for a leap to become a 'semiconductor superpower' even before his inauguration, is facing concerns about missing the 'golden time' as the National Assembly remains deadlocked. In fact, the 'K-Chips Act (Semiconductor Special Act)' proposed by the People Power Party's Semiconductor Industry Competitiveness Enhancement Special Committee is also stalled due to opposition party non-cooperation.

According to the National Assembly and foreign media on the 5th, the Wall Street Journal (WSJ) reported on the 4th (local time) that Micron will invest up to $100 billion (approximately 142.8 trillion KRW) to build a large-scale semiconductor factory in New York.

According to the report, Micron announced that it will begin construction of the largest semiconductor factory in the United States starting in 2024 in the Clay area near Syracuse in upstate New York. Sanjay Mehrotra, CEO of Micron, said, "Through Micron's New York and Idaho plants, the company's production share in the U.S. will expand from 10% to 40% within about 10 years." Last month, Micron announced it would invest $15 billion to build a new DRAM semiconductor factory in Idaho.

This decision aligns with the Biden administration's recent 'Made in America' strategy. The semiconductor support law (Chips and Science Act·CSA), signed earlier by President Biden, includes provisions to provide subsidies and a 25% tax credit benefit to companies building semiconductor factories in the U.S. WSJ reported, "As the U.S. government strives to revitalize domestic production of key components including semiconductors, investments in chip manufacturing facilities are increasing." President Biden issued a separate statement on the day, calling Micron's investment decision "another victory for America."

Earlier, another U.S. company, Intel, also announced plans to build a large-scale semiconductor factory worth $100 billion in Ohio.

The U.S. is both a business partner and rival to South Korean semiconductor companies. The slower the policy execution compared to competitors, the greater the business management risks become. The problem is that discussions on the 'K-Chips Act,' which would expand the current 6-16% tax credit rate to 20% for large corporations, 25% for mid-sized companies, and 30% for small businesses, are sluggish.

The K-Chips Act was proposed on August 4 but has yet to undergo even the subcommittee review by the Industry, Trade, Small and Medium Enterprises Committee. After review, it must pass the committee (the competent standing committee), and the review can only proceed if the subcommittee secretary or chair places the bill on the agenda. The subcommittee itself can only be convened after consultation among the committee chair, subcommittee chair, and secretary. Realistically, it is difficult to hold the subcommittee during the ongoing National Assembly audit session, which runs until the 24th, according to a National Assembly official. After the audit, if the budget subcommittee convenes before the Budget and Accounts Committee, each standing committee could hold subcommittee meetings to process the bill, but this is also uncertain at this time.

A semiconductor industry official said, "In a situation with many risks such as inflation and an uncertain semiconductor market, policy support must be provided timely so that companies can manage predictably to compete properly in the global market." He added, "The faster the K-Chips Act passes, the easier it will be for companies to make major decisions such as investment and management effectively."