[One Year of the Yoon Administration]⑦ Industry Hopes: "Investment Support and Mitigation of Trade Risks"

What the Industry Expects from the President
Investment Support, Mitigation of Trade Risks, and Systematic Workforce Development
Strengthening of US and China’s Domestic Industry Protection Policies
Expectations for the President’s Active Role

On the 3rd, Asia Economy asked key figures in major industries of our economy such as semiconductors, automobiles, and batteries what they expect from the president on the occasion of his first year in office. First, the industrial sector requested the resolution of trade frictions caused by the US-China trade conflict.

The semiconductor industry has been directly hit by the US-China trade conflict. It is known that recently the US directly requested our companies not to compensate for the shortage of Chinese semiconductors. Since last year, the US has banned the import of advanced semiconductor manufacturing equipment made in the US into Chinese factories. While multinational companies such as Samsung Electronics, SK Hynix, and TSMC have been granted a one-year export control exemption, this grace period ends in October. Domestic semiconductor companies hope that the US will extend the exemption period for export restrictions on advanced equipment to China.

Ahn Ki-hyun, Executive Director of the Semiconductor Industry Association, said, "The exemption period for the ban on importing advanced equipment to China ends this October, but the extension is uncertain," adding, "The exemption period should be extended so that our companies' factories in China can continue to operate normally."

President Yoon Suk-yeol visited SK Siltron in Gumi-si, Gyeongsangbuk-do last February to inspect the silicon wafer production facility.
[Photo by Yonhap News]

The battery industry recently overcame a hurdle as the US announced detailed guidelines for the Inflation Reduction Act (IRA) favorable to our companies. However, the industry fears that the US may again lock the gates under the pretext of protecting its own industry at any time. As countries pour out various incentives to increase domestic production, there is a call for our government to present investment support policies that meet global standards.

The automobile industry is rapidly shifting its paradigm toward electric vehicles. It is a period of large-scale investment for the transition to electric vehicle production. Domestic automobile companies are increasing local production to expand exports while also considering increasing domestic investment.

The industry insists that it is urgent to clearly designate electric vehicle production facilities as 'national strategic technology commercialization facilities.' Although the government passed the Restriction of Special Taxation Act in March, including hydrogen and future mobility as national strategic technologies, electric vehicle production facilities were not designated as strategic technologies. The industry also wants the enactment of a 'Future Vehicle Special Act' to systematically support future car companies and parts conversion companies.

Kim Ju-hong, Senior Director of the Korea Automobile Manufacturers Association, emphasized, "Although the government announced policies to foster the future car industry, investment support is still poor compared to other industries," adding, "The Future Vehicle Special Act should be enacted promptly to establish a system that systematically supports technology development, workforce training, and business conversion."

President Yoon Suk-yeol is inspecting the production line of Kia Autoland Hwaseong Plant 3 in April.
[Photo by Yonhap News]

The battery industry also pointed out the lack of domestic investment incentives. Governments in the US, Europe, and other countries are sending love calls to attract factories from Korean battery companies. Batteries are a core component in the electric vehicle supply chain, and Korean battery companies are global top-tier in technology and quality. This means that our companies can choose the factory sites of global automakers and countries they want and proceed with their business.

A battery industry official said, "The US and Europe are busy attracting factories by offering astronomical subsidies, but Korea lacks not only subsidies but also tax benefits," adding, "Although there is a difference in market size, we must not let the manufacturing ecosystem be completely taken overseas."

The recent manpower shortage caused by the rapid growth of the battery industry is also a problem. It takes considerable time to train specialized personnel, but as the industry grows rapidly, the talent development curriculum has not been systematized. It is also difficult to find experts with abundant experience. Another battery industry official appealed, "There is a shortage of about 1,000 master's and doctoral level personnel annually and about 1,800 bachelor's level process operating personnel," adding, "The supply of bachelor's level personnel must increase for overseas factories to operate, but the manpower supply is lagging behind the speed of factory expansion."