The government reaffirmed its commitment to harnessing every available resource to propel cutting-edge industries like semiconductors, batteries, and displays to new heights. Deputy Prime Minister and Minister of Finance and Economy Choi Sang-mok will conduct on-site visits to pertinent industrial facilities, identifying challenges and devising targeted solutions for effective assistance, the Ministry of Finance and Economy said in a press release, Sunday.
The move comes amid intensifying global semiconductor competition, prompted by the recent rush to expand support for chipmakers by major economies such as the United States, China, Japan and the European Union.
The United States spearheaded the movement by unveiling one of the largest federal investment plans, earmarking a $19.5 billion grant for U.S. tech behemoth Intel. This initiative aims to position the U.S. as a dominant force in the chip manufacturing sector. With ambitions to escalate its share of the global semiconductor market to 20 percent by
2030, a substantial leap from its current standing of less than 10 percent, the U.S. is fervently pursuing technological supremacy in this critical industry.
U.S. President Joe Biden vowed to turn the chip industry into a totally new ecological system during a visit to Intel’s Ocotillo Campus in Chandler, Arizona, Wednesday. “America invented these chips. Unlike my predecessor, I was determined to turn things around to invest in America, in all Americans – and that’s what we have been doing,” he said.
The subsidy allocated to Intel dwarfs those designated for Samsung Electronics and Taiwan’s TSMC, which are slated to receive $6 billion and $5 billion, respectively, for their investments in the U.S. However, there are mounting concerns that Samsung and TSMC may receive fewer grants than anticipated, given the perceived disproportionate support favoring Intel.
U.S. Commerce Secretary Gina Raimondo previously underscored what’s being perceived as a “national security problem” confronting the United States due
to its dependency on Asian countries for the acquisition of advanced chips. Additionally, Raimondo noted that global corporations had requested $70 billion in grants from the $28 billion allocated under the CHIPs and Science Act funding.
We urge the U.S. administration to allocate appropriate grants to Samsung, in line with the principles of fairness and the longstanding chip alliance between our two countries.
To mitigate potential harm to domestic enterprises resulting from reduced grants, the Yoon Suk Yeol administration must take proactive measures and bolster diplomatic efforts. Officials in charge of related policies should actively persuade their U.S. counterparts, emphasizing the longstanding and faithful partnership between Korean companies and the United States. This strategic approach aims to ensure that Samsung will secure the maximum possible assistance.
Efforts must be redoubled to prevent situations where domestic firms are highly vulnerable to U.S. legislation such as the Inflation Reductio
n Act (IRA), which notably impacted Korean automakers like Hyundai Motor.
As the semiconductor battle intensifies, major players including Japan, the European Union and China are stepping up efforts to compete. Japan has allocated a substantial budget of 4 trillion yen ($26.4 billion) to support its chip industry. Meanwhile, the European Union plans to invest a staggering 43 trillion euros ($46.5 trillion) by 2030 in this endeavor.
China launched a $44.6 billion project to realize its ambitious motto of “semiconductor industry self-reliance.” It has also begun another project to collect $26 billion to nurture its chip sector.
In contrast, Seoul still has a long way to go to catch up with major competitors. Domestic chipmakers are suffering from lackluster support from the government, and such woes are compounded by bureaucratic red tape. Compared to their counterparts in the U.S., Japan and Taiwan, these entities can anticipate minimal investment tax incentives and scarce state subsidies.
The political se
ctor warrants criticism for exacerbating anti-business sentiment by opting for stringent regulations. For instance, despite SK hynix submitting a letter of intent for investment as far back as 2019, it will be unable to commence construction of its chip cluster in Yongin, Gyeonggi Province, until next year. Additionally, the turnover of Samsung Electronics, once the global leader in chip manufacturing, fell to fourth place last year with sales totaling $45.9 billion, trailing behind TSMC ($66.8 billion), Intel ($51.4 billion) and Nvidia ($45.9 billion).
Samsung Electronics CEO Kyung Kye-hyun vowed on Wednesday to utilize aggressive business tactics to retain the position of being the world’s No. 1 chipmaker for the foreseeable future. Now, it’s imperative for the government and the political sector to respond by offering meaningful assistance to Samsung and other chipmakers. This should entail expanding tax and financial benefits, along with implementing significant deregulatory steps to support their growth
and competitiveness.
Source: Yonhap News Agency
