[1 Year of Yoon Administration]⑧ How Much Has the Pursuit of Semiconductor Superpower Been Achieved?

Focus on Securing Super-Gap in Future Strategic Industries Including Semiconductors
K-Chips Act Enacted After 8 Months
Accelerated Approval for Semiconductor Investments

"We will build a semiconductor superpower." This was a statement made by President Yoon Seok-yeol during his presidential campaign one year ago, pledging to achieve a super-gap in the semiconductor industry as part of his economic platform. Right after his election, President Yoon included "securing a super-gap in future strategic industries such as semiconductors, AI, and batteries" in his 110 major national tasks. He also set a goal to expand semiconductor exports from $128 billion in 2021 to $170 billion by 2027, an increase of more than 30%.

In June 2022, President Yoon Seok-yeol is seen examining a semiconductor photomask. [Image source=Yonhap News]

Marking one year since his inauguration in May 2023, President Yoon is focusing on securing a super-gap in future strategic industries including semiconductors under the dynamic economic policy of "private sector-led, government-supported" that he proposed during his campaign. The most notable achievement so far is the implementation of the "K-Chips Act" (an amendment to the Restriction of Special Taxation Act) to foster the semiconductor industry. After the People Power Party’s Semiconductor Special Committee first proposed the bill in August last year, the K-Chips Act lost momentum amid partisan conflicts but, following a lengthy revision process, it was finally enacted through a Cabinet meeting proclamation on April 11, eight months later.

The core of the act is the investment tax credit. The tax credit rate for investments in national strategic technologies such as semiconductors and secondary batteries was raised from 8% to 15% for large corporations and from 16% to 25% for small and medium enterprises. This increase was largely influenced by President Yoon’s direct instruction to raise the semiconductor tax credit. Additionally, the current 4% additional tax credit rate for new investments was increased to 10%, allowing large corporations to receive up to 25% and SMEs up to 35% in tax credits. This aligns with the Yoon administration’s promise to provide bold incentives for semiconductor facility investments and to establish a growth foundation for national advanced strategic industries.

The government’s promise to accelerate the approval process for semiconductor investments is also progressing alongside legal amendments. In January this year, the government amended the Special Act on National Advanced Strategic Industries to introduce the "approval timeout system." When companies request approvals from local governments for water supply, electricity, site location, etc., the local government must decide to approve or reject within 60 days. If no action is taken within 60 days, the approval is deemed granted.

This system reflects the determination not to repeat the delays SK Hynix experienced during its 120 trillion won investment to build a semiconductor plant in Yongin, where various approval procedures such as land and business rights compensation, environmental impact assessments, and water facility permits caused setbacks. However, whether the "global standard compliance principle" and the "approval timeout system"?aimed at lowering regulations to the level of competing countries for the creation of 15 national advanced industrial complexes including the 300 trillion won-scale world’s largest advanced system semiconductor cluster?will function properly can only be confirmed after more time passes.

President Yoon Suk-yeol and U.S. President Joe Biden visiting Samsung Electronics' semiconductor plant in Pyeongtaek City on May 20, 2022, signing the world's first 3-nanometer semiconductor prototype.
[Image source=Yonhap News]

The promise to create an ecosystem for nurturing talent to lead future strategic industries by designating semiconductor-specialized universities and expanding related department quotas is still in its early implementation stage. First, the government announced that it will select eight semiconductor-specialized universities this year, providing a total of 54 billion won in support and training about 400 semiconductor talents annually.

The government is running semiconductor-specialized university programs aiming to train approximately 5,000 master’s and doctoral level personnel. However, the start of freshman education is scheduled for the second half of this year. There is currently a shortage of semiconductor personnel needed immediately. Specialized universities for industries linked to the semiconductor sector, such as secondary batteries and displays, can only be pilot-designated next year. Despite the shared recognition by the government and companies on the need to secure talent, challenges such as budget procurement and securing faculty members remain, accumulating as obstacles to building a talent nurturing ecosystem.