[Peace&Chips] Semiconductor Frontier Europe Emerges... What About Korea in the New Competitive Landscape?

Unanimous EU Member Support for Semiconductor Aid Bill
Samsung Pyeongtaek Campus Becomes Must-Visit for European Leaders Visiting Korea
National-Led Competition Intensifies, but Domestic Outlook Remains Bleak

Editor's NoteSemiconductors. We hear about them every day, but when it comes to explaining the concept, it's hard to find the words. Called the rice of modern industry, it's something you can't afford not to know about, yet articles and books on semiconductors are often so difficult that people avoid them. But did you know that semiconductors are actually quite fascinating? Even a single semiconductor component hides the mechanisms of the entire industry and the interests of nations. Peace and Chips will spoon-feed you the hidden contexts and meanings of this somewhat uncomfortable semiconductor field. Just place your spoon.

[Asia Economy Reporter Kim Pyeonghwa] The global power struggle surrounding semiconductors is heating up further. As the United States strengthens its competitiveness through the semiconductor support law (Chips and Science Act·CSA), which includes various subsidies and tax incentives, Europe?quiet until now after Taiwan and Japan?has stepped forward. They have taken the first serious step to realize the ambitious dream of producing 20% of the world's semiconductors in Europe by 2030.

Last week, the 27 member countries of the European Union (EU) expressed their support for the €43 billion semiconductor support bill (European Chips Act) promoted by the EU Commission. After months of discussion on the bill proposed by the Commission earlier this year, they unanimously agreed to push it forward. The bill is scheduled to be presented as an agenda item to the European Parliament, which will hold a meeting on the 1st of next month, so the implementation of the bill seems imminent.

This decision by the EU is a result of the prominent global power competition in the semiconductor sector. As semiconductor industry competitiveness becomes a key pillar determining a nation's economic and security level, governments worldwide are pouring out support measures, and the EU is aligning with this trend. Although Europe has a developed automotive semiconductor and semiconductor equipment industry, it only accounts for 8% of global semiconductor production, presenting a significant challenge. Consequently, unlike the initial plan to support only some cutting-edge semiconductors, the scope of semiconductor support has been expanded to include artificial intelligence (AI) and energy sectors.

Recent visits by European leaders to Samsung Electronics' semiconductor hub in Pyeongtaek, South Korea, can also be seen in this context. This month alone, German President Frank-Walter Steinmeier and Spanish Prime Minister Pedro Sanchez each visited the Pyeongtaek campus. These were the first official visits by the two leaders. Given the importance of semiconductor production facilities, visits by European leaders to South Korea have become a must on their itinerary.

As state-led semiconductor competition intensifies, we must also prepare. However, the domestic situation can be summed up as a "sweet potato" (a Korean expression meaning frustrating or stuck). A representative example is the K-Chips Act (National Advanced Strategic Industry Amendment Act and Tax Incentive Restriction Act Amendment), which was proposed in August to enhance semiconductor industry competitiveness through tax support but is currently stalled in the National Assembly due to political disputes. While EU member countries unanimously adopt related legislation, here, even the ruling and opposition parties have failed to find common ground.

Last week, the opposition Democratic Party's Livelihood Economic Crisis Countermeasures Committee visited Samsung Electronics' Suwon plant, emphasizing Samsung's significant role in boosting domestic semiconductor competitiveness. However, with greater responsibility now resting on the government and the National Assembly to address these tasks, it is regrettable that there has been no concrete discussion of alternatives at the parliamentary level. We hope the political sphere will actively seek solutions to pressing issues, just as it recently resolved the problem of SK Hynix's semiconductor cluster in Yongin?which had been difficult to start due to the reluctance of Yeoju city to provide industrial water. We look forward to proactive problem-solving on the many challenges ahead.