Baek Byung-yeul is a journalist at The Korea Times focused on cultural content, including films and cultural events in South Korea. You can contact him at baekby@koreatimes.co.kr to share your insights.
Chip industry welcomes Korean version of 'CHIPS for America Act'
Industry Minister Sung Yun-mo, left, takes a look at a semiconductor wafer with Seoul National University researchers at the school's laboratory, April 14. Yonhap
By Baek Byung-yeul
By Baek Byung-yeul
Industry officials and analysts said Monday that they are welcoming the government's push to enact a new law that will be written to support the local semiconductor industry by providing various benefits including tax cuts.
They agreed the government's move seems to be late, saying it is rushing to establish a support measure as U.S. President Joe Biden is pushing forward to enact the CHIPS for America Act, which offers an investment tax credit of 40 percent for equipment or facility costs. The new act came at a time when the U.S. government is trying to increase investment and local chip production.
Given semiconductor companies require an enormous amount of investment to purchase equipment and equip themselves with production facilities, they added the special law would help increase their competence.
“It is true that the support measures have been insufficient. The government have always said that the semiconductor industry is the best card we can play, but their support measures for the industry have been focused on fostering companies in businesses like chip materials, components and equipment. If the new law is enacted, it will definitely help local chip companies boost their investment,” an official from the local chip industry said on condition of anonymity.
The ruling Democratic Party of Korea said it will soon launch a special committee to enact support measures for the chip industry.
Rep. Yang Hyang-ja of the party, who once worked as an executive of Samsung Electronics, said it is urgent that the government provides more benefits to chip companies helping them maintain competitiveness in the industry.
“China provides a 10-year exemption from corporate taxes to chip companies and the European Union is also considering offering subsidies to investment costs,” Yang said adding that the special committee will try to enact the new law in the National Assembly next month.
Industry officials also expect that the government could provide an exception to chip companies when dealing with chemical substances.
“Due to the current Act on Registration and Evaluation of Chemical Substances, it takes too much time to add a new production line. It is understandable that tight regulations should be applied to semiconductor companies that are dealing with a massive amount of chemical substances but we expect that the new law could also include a fast-track program so we can shorten the approval process,” the official said.
The success of the new law depends on how well the act is designed to maintain “continuity,” said Lee Jong-hwan, a professor at the Department of System Semiconductor Engineering at Sangmyung University.
“We've seen a lot of cases where decisions made under the previous administration were reversed when a new administration was established. When it comes to the chip industry, it takes about two years to see the effectiveness of the new chip production facility. Considering these characteristics of the chip industry, the new law should be enacted with a long-term view,” the professor said.
Industry officials also called on the government to invest more in fostering professionals in the semiconductor industry.
“In the chip industry here, most new employees majored in other disciplines such as chemistry or electronic engineering, not specifically semiconductors. This means chip companies have to spend a lot of time and money to foster the professionals they need,” a chip industry official said. “It will be good for both the chip companies and their employees if the newcomers learn practical parts of the chip business in school and then join the company.”
In response to the call, Industry Minister Sung Yun-mo announced April 14 that the government plans to foster training for 4,800 people in the chip industry over the next two years.
To achieve the plan, the government will support universities to establish new classes in chip design designed for third-year students, starting from next year. Students who undertake the studies will see greater opportunities to work at chip design companies based on their education, the ministry said.
Lee of Sangmyung University urged the government to come up with a long-term measure so that young people continue to pay attention to the chip industry.
The government should know that young people are very sensitive to their expected income levels. This is why they are paying more attention to information technologies. So, the government should instill a long-term vision that this industry is a promising part of the future and people in the semiconductor industry deserve higher salaries,” the professor said.