While major countries such as the United States, Japan, and the European Union (EU) are rushing to provide subsidies for semiconductors, there are growing voices that Korea will lose the global semiconductor war if it does not subsidize Korean companies such as Samsung Electronics and SK hynix, citing trade friction concerns and support for large companies.
“In the memory semiconductor field, competitors are fiercely catching up with Korean chipmakers, and Korea does not have overwhelming technology in the non-memory field,” said Choi Joong-kyung, chairman of the Korea-America Association, on March 19, who served as minister of knowledge economy during the Lee Myung-bak administration. “Under such circumstances, if the Korean government does not subsidize semiconductors, Korea will inevitably fall behind in global semiconductor competition. If only Korea does not subsidize them, the Korean semiconductor industry will be forced to lose the global semiconductor race. It is frustrating to oppose semiconductor subsidies for Korean chipmakers for reasons such as favoring large companies.”
Major countries are already stepping up their subsidy policies to foster their semiconductor industries. The United States laid out a plan to give more than US$6 billion in subsidies to Samsung Electronics. Korea’s competitors in the semiconductor industry -- Europe, Japan, India, and other countries -- are offering subsidies of 40 to 70 percent of factory construction costs to attract semiconductor companies to their countries. In contrast, Korea’s semiconductor subsidies are zero with the only support coming from investment tax credits that expire at the end of this year. This is why some industry experts are raising concerns that Korea’s major semiconductor production bases may be leaving Korea for other countries.
There are also many arguments against subsidies such as favoring large companies and possible World Trade Organization (WTO) sanctions. “Some people worry about the WTO or raise the issue of favoring large companies without knowing global trends in the world semiconductor industry,” said Choi Seok-young, an advisor at law firm Gwangjang who served as ambassador to Switzerland. “Korea ought to maintain its super-wide semiconductor gap with its competitors, which is not a mission for Korean semiconductor companies alone.” Chairman Choi had similar views on that. “They overlook the fact that a semiconductor ecosystem is made up of not only large companies but also various small and medium-sized companies,” the chairman said.
In the political arena, a semiconductor subsidy debate is also gaining traction. The ruling People Power Party plans to reorganize the existing support system, which can only provide indirect support such as tax credits, to provide a basis for subsidies.