[Retreated K-Chips Act]④ "K-Semiconductor Running with Sandbags"

Lee Chang-han, Vice Chairman of the Korea Semiconductor Industry Association

[Asia Economy Reporter Park Sun-mi] "In the marathon of semiconductor competition, it feels like we are running with sandbags tied to our legs."

Although the government has established the K-Chips Act (Semiconductor Special Act) to enhance the competitiveness of the domestic semiconductor industry, the industry still feels that policy support is insufficient. There is widespread concern that the current market share of 20% may be lost if this continues.

On the 2nd, Lee Chang-han, Vice Chairman of the Korea Semiconductor Industry Association, pointed out in an interview with Asia Economy that the government's semiconductor support is woefully inadequate compared to competing countries. Regarding the recent passage of the amendment to the Restriction of Special Taxation Act (RSTA), which raised the corporate tax credit rate from 6% to 8%, he criticized it as "a scale far too small compared to incentives offered by competing countries."

He explained, "The United States offers a 25% tax credit incentive for domestic facility investments, and China and Japan are also taking strong measures by revising related laws to promise large-scale incentives. Initially, the new government promised to remove unnecessary regulations that hinder companies, but currently, Korea is in a situation akin to running a marathon with sandbags tied to its legs."

He added a warning that lower investment and incentives compared to competing countries will lead to a long-term decrease in corporate facility investment, ultimately resulting in a decline in market share. In the semiconductor industry, where speed competition is vital, investments made in the next few years can be a fatal blow determining leadership for decades, making full government investment and support urgently necessary.

Vice Chairman Lee said, "The semiconductor industry will inevitably continue to grow through convergence and expansion with other industries such as automobiles, home appliances, bio, robotics, and energy in the future intelligent era, so we must prepare by expanding technology development and facility investment aligned with industrial change trends."

He particularly cited the government's semiconductor policy shortcomings, noting that support for facility investments, which require astronomical costs, is very stingy due to perceptions of favoritism toward large corporations and the metropolitan area. Although a budget of 100 billion KRW has been allocated for infrastructure (power, water, wastewater, roads) in large semiconductor industrial complexes such as Pyeongtaek and Yongin, considering that major advanced countries like the U.S. and China directly build and operate infrastructure, full support based on global fairness is necessary. Vice Chairman Lee emphasized, "Improving investment conditions for semiconductor companies is the most urgent task to maintain the status of a semiconductor powerhouse."

To overcome the weaknesses of K-semiconductors, which lack competitiveness in system semiconductors and materials, parts, and equipment (SoBuJang), he advised creating dedicated funds for SoBuJang, fabless, and packaging to stimulate investment in vulnerable sectors of our industry, and establishing an R&D cluster encompassing the entire semiconductor industry to discover new R&D items in promising fields such as automobiles, IoT, and bio. He also stressed the need for support in technology development for new growth areas such as power semiconductors, automotive semiconductors, and artificial intelligence (AI) semiconductors, as well as building a win-win cluster between large and small-to-medium semiconductor companies from an ecosystem perspective.

Vice Chairman Lee explained, "TSMC, the world's number one global foundry company, grew through organic cooperation with surrounding fabless companies," adding, "This is why Korea must also build a collaborative ecosystem as a win-win cluster between foundry-fabless and manufacturing-SoBuJang companies."

He also emphasized the association's efforts to overcome another weakness of K-semiconductors: industry-tailored human resources. Vice Chairman Lee said, "The Semiconductor Association, in cooperation with the government, launched the Korea Semiconductor Academy on the 1st of last month," adding, "The industry will directly participate to intensively nurture job-specialized personnel and operate the academy to supply excellent human resources to semiconductor companies."