Korean chips are anything but useless, critics say

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President Yoon Suk-yeol examines a wafer at the National Nanofeb Center located within KAIST in Daejeon on April 29. [YONHAP]

Once hailed as Korea’s answer to the U.S. chip law, a bill to increase tax incentives for semiconductor manufacturing facilities was finally passed last week, but disappointed lawmakers in the United States. two largest parties, industry and academia due to less than expected benefits. . Representative Yang Hyang-ja, lead author of the bill and head of a special committee on promoting chip industry competitiveness, harshly criticized the finalized version of the bill, saying “it is worth Better to veto” the bill rather than pass it. its current status. Non-political members of the committee and four associations representing the local semiconductor industry issued a statement on Monday asking the National Assembly to reconsider the passed bill, a revision of the Special Taxation Restriction Act. Adopted on December 23, it would entitle large companies to a tax credit of up to 8%, against 6% previously, for investments in the manufacture of semiconductors. For small companies, the percentage remains at 16% and for medium-sized companies, it remains at 8%. The bill initially aimed to support growth in high-tech areas such as semiconductors, biopharmaceuticals and electric vehicle batteries by increasing tax benefits. Within academia and industry, some even said it was better to veto the bill than pass it, said Yang Hyang-ja, a former Samsung Electronics executive turned lawmaker and lead author of the bill, at JoongAng Ilbo. Yang, a former member of the main opposition Democratic Party and now independent, heads the special committee formed by the People’s Power Party. Increased investment and tax credits should be an issue that should be addressed from a global perspective as countries enter a global chip war, she continued. “It would be difficult to formulate a strong semiconductor industry because of low tax credits.

The National Assembly passes the revised Special Tax Law Restriction Bill on December 23. [YONHAP]

When we first proposed the bill, we first claimed a 20% tax credit, said Professor Kim Yong-seok of Sungkyunkwan University’s School of Electronic and Electrical Engineering. . The presidential office should have deliberated more on the tax rate before allowing the National Assembly to pass the bill. Yoon promised to support the bills because semiconductors “determine the fate of the Korean economy”. adopted in July, which increased the tax credit rate to 25% when a company decides to build a semiconductor factory in the country, regardless of its size. China reduces corporate tax by 50-100% for semiconductor companies and will provide financial support of 1 trillion yuan ($143.38 billion) to the industry by 2025. Taiwan is also continuing its efforts to raise the credit rate 15-25% research and development tax for in-house semiconductor companies. the industry is weak and barely receives enough financial investment, said Park Jea-gun, president of the Korean Society of Semiconductor & Display Technology. If we lose the momentum now, in two to three years, well lose the market even if we have the technology. Once we lose momentum, we cannot reverse it. K-chip bills are also losing momentum, such as those for training professionals and simplifying the licensing process. Initial revisions to the law included increasing the number of students accepted for semiconductor-related majors. During the negotiation process, this part of the bill was omitted because it sparked a regional dispute that the policy would be more beneficial to universities in the greater Seoul areas. The bill was settled to adjust the number of students accepted into related majors within the limits of the number of designated students. Academia strongly opposed the issue, arguing that lawmakers failed to see the big picture, which allowed the future potential of the semiconductor industry to be limited by immediate regional disputes. Restructuring the school system is difficult whether the university is in Seoul or not, said a professor who wished to remain anonymous. At this rate, it would be difficult for universities in the regions to create majors related to semiconductors, which would make it more difficult to fill the current labor shortage within the industry. A bill on reducing red tape in the construction of chip factories is still pending. The government plans to fund 1 trillion won on domestic industry, such as training professionals and R&D, so we stand as close together as the United States and Taiwan, People Power lawmaker Yoon Young-seok said. Party (PPP). We understand that the tax credit rate is not enough, said PPP lawmaker Yun Ju-keyng. We will try to come up with alternative support plans like the US and Taiwan have done. It is becoming increasingly clear that the domestic chip industry is experiencing a slowdown due to weak demand. Samsung Electronics’ revenue was 71.86 trillion won while operating profit was 6.64 trillion won in the fourth quarter, down 6.14 percent and 52.1 percent from the same period last year, according to market consensus compiled by FN Guide. Global chip production will continue to be in surplus next year as countries like the United States and China control semiconductor activity, said analyst Nam Dae-jong of eBest Investment & Securities. . “The government and the National Assembly seem only concerned about a possible decline in tax revenue,” said Yoo Hwan-ik, head of the enterprise policy division of the Federation of Korean Industries (FKI). long-term point of view if Korea wants to ensure the initiative and momentum of the future chip industry.

BY KO SUK-HYUN, PARK EUN-JEE [[email protected]]

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