National Assembly and Industry Emphasize "Direct Semiconductor Support"... Annual GDP Boost of 7.2 Trillion Won Projected

Production Inducement of 15.6 Trillion Won Through Semiconductor Plant Investment
Annual Semiconductor Output of 10 Trillion Won After Plant Operation, with an Additional 13.7 Trillion Won in Production Effects
Semiconductor Subsidies Can Be Recouped Through Taxes Within 5 to 6 Years
HBM Investments Enable Subsidy Recovery in Just 2 to 3 Years

As the economic growth rate for the first quarter recorded a negative figure, calls have emerged from the National Assembly and the industrial sector for actively supporting strategic industries such as semiconductors to boost growth. An analysis was also presented, suggesting that if the government invests 5.5 trillion won annually in the semiconductor industry, the gross domestic product could increase by more than 7.2 trillion won each year compared to a scenario with no support.

On April 28, the Korea Chamber of Commerce and Industry held a forum titled "Directions and Tasks for Korean-Style Semiconductor Support Policies" at the National Assembly Members' Office Building, in collaboration with the National Future Vision Forum, a parliamentary research group, and the Korean Economic Association. The event was attended by Representative Cho Jeongsik, Research Director Jung Taeho, National Assembly Vice Speaker Lee Hakyoung, lawmakers Ahn Hoyoung, Kwon Youngjin, Kim Jooyoung, Lee Kiheon, Lim Gwanghyun, Jung Jinwook, as well as Park Iljun, Executive Vice Chairman of the Korea Chamber of Commerce and Industry, and Lee Geun, President of the Korean Economic Association, among others.

Kim Deokpa, a professor at Korea University who was responsible for analyzing the economic effects of the semiconductor industry, stated, "If the government provides annual support to the semiconductor sector equivalent to 0.25% of the gross domestic product, or 5.5 trillion won, the growth rate will rise by 0.17 percentage points (about 3.7 trillion won) each year." He added, "In contrast, if there is no support at all, the growth rate could drop by 0.16 percentage points (about 3.5 trillion won)," emphasizing that "depending on whether support is provided, there is a difference of 7.2 trillion won annually."

Professor Kim argued, "Government support for semiconductors leads to increased private investment and promotes technological advancement, thereby enhancing industrial competitiveness. At the same time, it has the effect of fostering growth in other industries." He further insisted, "Like our competing countries, we should also actively consider the direct subsidy approach."

This study also specifically analyzed the effects of investing in semiconductor plants. It was found that building a new semiconductor plant requires 21 trillion won, and if 8 trillion won of this is invested in a 5:3 ratio between plant construction and the purchase of domestic equipment, it generates 15.6 trillion won in production effects across other industrial sectors. Once the plant is completed and begins operation, it is expected to produce 10 trillion won worth of semiconductors annually, while generating an additional 13.7 trillion won in production effects.

The fiscal recovery effect of semiconductor support was also presented. Professor Kim stated, "If 22 trillion won, equivalent to 1% of the gross domestic product, is provided as support, tax revenue will increase by 4 to 6 trillion won annually due to economic growth," and added, "The entire amount of government support could be recovered through taxes within five to six years." He particularly noted that if support is provided for high-value-added products such as high-bandwidth memory (HBM), the high profitability could enable the government to recover the investment in taxes within two to three years.

During the panel discussion, the need for changes in semiconductor strategies amid global competition was also raised. Kim Changwook, MD Partner at Boston Consulting Group, pointed out, "Until now, Korea has limited itself to indirect support such as tax reductions," and argued, "Going forward, we need to move beyond the controversy over preferential treatment for large corporations and expand direct support for high-value-added industries in order to survive in the global technology race."

The issues of building semiconductor infrastructure and securing talent were also discussed. Ko Jongwan, Director of Strategic Planning at the Korea Semiconductor Industry Association, emphasized, "Companies have faced serious problems with cost burdens and permit delays while building infrastructure themselves," and insisted, "The government should take responsibility for establishing public infrastructure so that companies can focus on their core businesses." He also mentioned the need to introduce a zero-carbon energy certification system to ensure the semiconductor industry's environmentally friendly response.

Choi Jaehyuk, a professor at Seoul National University, said, "We need strategies to prevent the outflow of outstanding domestic talent and actively attract top foreign talent," and added, "Companies should provide bold compensation based on performance, and the government and universities must establish systems that allow researchers to work stably."

The government also announced plans to expand support for the semiconductor industry. Lee Kyubong, Director of the Semiconductor Division at the Ministry of Trade, Industry and Energy, stated, "We will increase the scale of support for the semiconductor industry to 33 trillion won and plan to inject an additional 4 trillion won by 2026," adding, "We will communicate closely with the industry and work with the United States to minimize tariff risks."

Cho Jeongsik, Representative of the National Future Vision Forum, stated, "Semiconductors are a key strategic asset that determines the nation's economy and security," emphasizing, "The National Assembly must play an active role in legislation, budgeting, and institutional design." Park Iljun, Executive Vice Chairman of the Korea Chamber of Commerce and Industry, also stressed, "The news of negative growth in the first quarter has shocked the industrial sector," and urged, "The political community must unite to support strategic industries such as semiconductors."

The Korea Chamber of Commerce and Industry also co-hosted joint seminars with parliamentary research groups in August and November last year on the need to support advanced industries and related legislative tasks.