[Initial Perspective] Show Comprehensive Support for Semiconductors Through Action

US, Japan, and China Race with Tens of Trillions in Subsidies
South Korea Lacks Subsidies and Is Too Slow to Respond
No Funding Plan for General Election Promises

Kwangho Lee, Head of the Industrial IT Department, Corporate Team.

As semiconductors emerge as a key global strategic industry, competition among countries to secure supply chains is heating up.

Major countries such as the United States and Japan are investing massive subsidies and tax benefits in related companies to foster the semiconductor industry and strengthen competitiveness. The U.S. is providing about 70 trillion won in production subsidies to companies building semiconductor factories domestically, while Japan is investing 18 trillion won to cover 50% of factory construction costs. Recently, the U.S. granted approximately 11 trillion won in subsidies to its semiconductor company Intel, and Japan also decided to provide subsidies exceeding 10 trillion won for two TSMC factories.

China, in response to the U.S. tightening export controls on semiconductor manufacturing equipment, has established a fund of 886 trillion won to increase the proportion of semiconductors produced domestically. The European Union (EU) plans to invest about 62 trillion won by 2030 through government and private companies. Although the EU generally prohibits government subsidies to companies, semiconductors are an exception.

Despite the outbreak of a global semiconductor race, our response remains frustratingly slow. There are no subsidies at all, and the only support is an investment tax credit (up to 25%) that expires at the end of this year. Recently, there were talks that the government is carefully reviewing subsidy payment plans, but the government immediately dismissed these, stating, "No specific plans related to expanding incentives for advanced strategic industry investments have been finalized yet."

With the 22nd general election just a week away, the political sphere is naming the southern Gyeonggi region, including Suwon, Yongin, and Icheon, as the "Semiconductor Belt" and promising all-out support. The People Power Party pledged to actively support the government’s early-year announcement of the "Southern Gyeonggi Semiconductor Mega Cluster" at the party level, strengthen support for the National Advanced Strategic Industry Act (Semiconductor Special Act), and simplify semiconductor development and investment approval procedures. They also promised subsidy support, aiming to significantly revise policies that had been limited to indirect support such as tax credits and convert them into direct support.

The Democratic Party of Korea proposed a semiconductor pledge to develop the southern and eastern Gyeonggi regions into a semiconductor megacity. The core is to build a "semiconductor ecosystem hub," expanding support for system semiconductors and advanced packaging, and fostering fabless companies through initiatives like the Pangyo K-Fabless Valley. They also pledged to establish an RE100 (100% renewable energy use) based semiconductor cluster. The plan includes creating a U-shaped renewable energy belt connecting the West Sea, South Sea, and East Sea coasts to provide infrastructure such as power and water to the semiconductor cluster. However, neither major party included systematic funding plans in their detailed pledges, raising concerns that these may be populist promises aimed at winning votes.

Semiconductors are a mainstay of our economy and a critical industry from a national security perspective. To avoid falling behind in competition, timely responses are essential. The government should actively consider providing support equal to that of competing countries. Furthermore, the political sphere must demonstrate semiconductor support measures through action, not just pledges. These promises must not become mere formalities displayed during the general election. For K-Semiconductors to successfully compete in the global market, the government and political parties must strengthen support across all areas.