Support for Expansion of 8-inch Foundry Facilities
The South Korean government will provide more than 1 trillion won for the expansion of 8-inch foundry facilities. It has also decided to abolish regulations concerning the foundry industry step by step.
Announcing a strategy to make Korea a semiconductor powerhouse” on May 13, the government said it will establish a special fund worth more than 1 trillion won to support the expansion of 8-inch foundry plants and investment in the materials, parts and equipment sectors and high-tech packaging facilities. According to the government, a total of nine companies expressed their will to invest more than two trillion won in these areas.
The government plans to extend long-term los-cost loans to the companies.
Foundries that use 8-inch wafers produce various analog semiconductors including image sensors, power management ICs (PMICs), display driver ICs (DDIs) and microcontroller units (MCUs). Most of the analog and power semiconductors needed by the automotive industry are produced at 8-inch foundries. Recently, 8-inch foundry companies such as DB HiTek of Korea and UMC of Taiwan raised their contract prices by 10 percent to 20 percent.
Related regulations will also be significantly simplified. The government will revise the High-Pressure Gas Safety Management Act which foundry companies complain does not match the realities of industrial worksites. The period of exempting imported containers from inspections will be expanded from six months to two years. It will also allow companies to introduce new technologies by lifting the restrictions on firewalls.
The government will also introduce a fast track that reduces the time required for licensing chemicals from the current 75 days to 30 days. In addition, it will shorten regulatory periods so that radio wave application facilities including wafer etching equipment used for semiconductor manufacturing processes can be operated before a facility inspection.
The government has also decided to significantly expand related tax support to encourage facility expansion and R&D. Investments related to core strategic technologies will be eligible for preferential tax deduction rates.
As for R&D, the government will raise the deduction rate by 10 percentage points from new growth engine and basic technologies to up to 50 percent (up to 40 percent for large companies). It will increase support for facility investment by increasing support by five to six percentage points compared to general facility investment and four percentage points compared to new growth engine and basic technologies.
The government has decided to apply tax benefits temporarily for three years from the second half of 2021 considering facility investment periods. It plans to submit an amendment to the Special Taxation Restriction Act including a revision to the tax law to the regular National Assembly in September.