[Peace&Chips] Fierce Medical School Boom... Semiconductor Workforce Shortage of 54,000 in 8 Years

Industry Faces Competitiveness Concerns Due to Talent Shortage
Local Governments Hope for Specialized Complexes, but Companies Worry
Amendment to Special Tax Act Stalls in National Assembly...Industry Criticizes

Editor's NoteSemiconductors, known as the rice of modern industry. Although it's a term we hear every day, it's often hard to explain. Peace & Chips will make the complex concepts and overall flow of the semiconductor industry easy to digest for you. Just place your spoon on it.

[Asia Economy Reporter Kim Pyeonghwa] "Many people are looking for it, but hardly anyone comes." This might be how we describe the current state of South Korea's semiconductor industry. The semiconductor sector has maintained its position as the number one memory country through relentless technological innovation, but behind this accolade lies a significant festering problem.

As everyone knows, the semiconductor industry is the main artery sustaining the national economy. Although the detailed figures vary each year, it accounts for about 20% of total exports as a single product. Experts predict that South Korea's economic dependence on semiconductors will increase further in the future. Naturally, this means the industry will face even greater expectations.

However, the semiconductor industry itself is under great pressure. Maintaining the crown requires securing competitiveness, but they lament the lack of talent to support this. This issue is raised not only by semiconductor manufacturers but also by equipment companies and the entire industry. There are even remarks stating, "Regardless of the company, there is a particular shortage of highly skilled talent with master's degrees or higher." It is forecasted that by 2031, the shortage of semiconductor personnel in South Korea will reach approximately 54,000.

[Image provided by the Ministry of Education]

Samsung Electronics and SK Hynix are operating contract departments with major domestic universities such as Yonsei University and Korea University to address this manpower shortage, but the results are not promising. Despite guaranteed employment upon admission, many of those who recently passed the regular admissions for these departments have declined enrollment. They have shifted to more popular fields such as medical sciences.

As the situation worsens, crisis statements from key industry leaders continue. Samsung Electronics SAIT Chairman Kim Ki-nam and SK Hynix Vice Chairman Park Jung-ho attended an academic event together last week and spoke in unison about the necessity of securing talent. Chairman Kim emphasized, "Sustained technological innovation requires excellent talent," and stressed that industry, academia, and government must unite as one team.

Former Samsung Electronics President Lim Hyung-kyu also urged the urgent need for talent development and overseas manpower utilization measures at a National Assembly seminar held last week. He stated, "Samsung Electronics survived the market upheaval in the 1990s and became number one in the world because of its technological capabilities," and "The level of core technicians determines a company's technology."

Statistics showing a decrease in the number of students admitted through early admission in semiconductor departments by university. Ultimately, the majority of admitted students in regular admissions declined to enroll.

While the sense of crisis on the ground grows, rosy prospects abound outside the industry. Local governments nationwide, including Chungbuk, Gyeongnam, Gwangju, and Jeonnam, are bustling with plans to promote semiconductor specialized complexes. These semiconductor specialized complexes are government projects that designate specific regions by June, characterized by expedited permits, facility investment support, and tax credits for research and development (R&D).

For local governments, this is a great opportunity to attract investments from semiconductor-related companies, so expectations are high. Each has formed a promotion committee and is making determined statements about "putting their lives on the line for attraction." Meanwhile, the competitiveness of companies that would invest in these specialized complexes is declining.

The National Assembly's handling of the amendment to the Restriction of Special Taxation Act, which includes grounds for raising the tax credit rate to the level desired by the semiconductor industry, is also uncertain. This amendment proposes increasing the tax credit rate from 8% to 15% for large corporations, but there is a significant temperature difference between the ruling and opposition parties. The opposition argues that semiconductor companies have already done well and, being large corporations, do not need support.

The industry voices criticism. Lee Chang-han, Vice Chairman of the Korea Semiconductor Industry Association, said, "The perspective is shortsighted, focusing only on the present and not the future." As semiconductors emerge as a key national security asset, competing countries like the United States are rapidly increasing government support, so are we the only ones going in the opposite direction?

This article is from [Peace & Chips], published weekly by Asia Economy. By clicking subscribe, you can receive articles for free.

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