[Inside Chodong]We Must Not Miss the 'Investment Timing' in Semiconductors

Jo In-kyung, Content Manager of the Industry Division

The Japanese government is reported to be injecting an additional budget of 3.4 trillion yen (approximately 31 trillion won) this year alone by increasing existing semiconductor-related funds to foster the semiconductor industry. Specific support amounts have also been mentioned, including 600 billion yen to the national policy company Rapidus, which aims to domesticize next-generation semiconductors, 900 billion yen to Taiwan's TSMC, which is building Japan's second foundry (semiconductor contract manufacturing) plant, and more than 700 billion yen in subsidies to existing semiconductor companies including Sony. This means the Japanese government is investing much more than the 2 trillion yen (about 18 trillion won) budget secured over the past two years to support the semiconductor industry.

Real estate regulations have also been boldly relaxed. As TSMC and others faced difficulties securing factory sites in Japan, the government directly intervened to lift the greenbelt (development-restricted zones) that had been locked for over 50 years and allowed advanced factories such as semiconductor plants to be built on farmland and forest land nationwide. This clearly shows how Japan, once a semiconductor powerhouse about 30 years ago but which has since declined, is desperately striving to revive its semiconductor industry by taking advantage of the intensifying semiconductor hegemony competition between the U.S. and China.

It is not only Japan. As the semiconductor industry becomes a battleground for global economic security competition, countries around the world are increasing full-scale government support to respond to semiconductor supply chain disruptions and strengthen their domestic semiconductor technology capabilities and manufacturing bases. The United States, through the 'CHIPS and Science Act' implemented since last year, plans to support the semiconductor industry with a total of $52.7 billion (70 trillion won) over five years, investing $39 billion (about 52 trillion won) specifically in semiconductor manufacturing facilities. The European Union (EU) also approved a semiconductor law last July, planning to support a total of 43 billion euros (62 trillion won) in public and private investments by 2030. China, too, aims to build an ecosystem capable of producing all semiconductors domestically, targeting a 70% semiconductor self-sufficiency rate by 2025, and plans to pour in more than 1 trillion yuan (about 181 trillion won).

Our government also hurriedly selected seven advanced industry specialized complexes, including two semiconductor sites, last July, promising to make every effort to secure a semiconductor super-gap competitiveness. The tax credit rate for facility investments in national strategic industries such as semiconductors has also been raised to a maximum of 25%. However, it was recently revealed by the office of Representative Yang Hyang-ja of the National Assembly's Industry, Trade, Energy, Small and Medium Business Committee that the next year's budget draft does not include any infrastructure development costs for the semiconductor specialized complexes in Yongin and Pyeongtaek in Gyeonggi Province and Gumi in North Gyeongsang Province. The world's largest Yongin semiconductor cluster, in which Samsung Electronics plans to invest 300 trillion won, is facing opposition from opposition parties demanding that the power supply plan be reestablished using renewable energy even before the first groundbreaking.

Within the semiconductor industry, there are concerns that even the insufficient budget and policy support compared to other countries may not be provided in a timely manner. Above all, the semiconductor industry is about 'timing.' Securing production capacity is competitiveness, and the speed of facility investment determines success or failure. It should also be remembered that once a technological gap occurs, it takes more time and resources to catch up. Now, as the semiconductor market recovery is expected with Samsung Electronics' semiconductor business division and SK Hynix likely to reduce losses compared to the previous quarter, the government must act swiftly to avoid missing the investment timing.