Chip industry to be supported by new administration

Economy

Published: 12 Apr. 2022, 17:50 Updated: 12 Apr. 2022, 19:34

Chip industry to be supported by new administration

Semiconductor equipment on display at an exhibition Semicon Korea 2022 held in Seoul in February. [YONHAP]

The new administration will be making semiconductors top priority as Korea battles powerhouses like Taiwan and fends off other competitive challengers.

Yoon Suk-yeol's government, which will be inaugurated May 10, intends to establish a graduate school committed to chip education, shift responsibility for approvals from local governments to the central government and expand tax support for companies investing in semiconductor facilities.

The initiatives take existing policy, which supports chipmakers, up a notch.

Yoon's transition team on Tuesday said the new government will be looking into various support measures related to semiconductors considering the importance of computer chips to the health of the national economy and supply chain security.

One of the key issues is the shortage of skilled workers and properly-educated executives to work for semiconductor manufacturers.

It is estimated that by 2031 the business will be short 30,000 employees.

In meeting these challenges, the semiconductor graduate school will include courses of study related to artificial intelligence and power grids.

Some programs will allow students who didn't study semiconductors to switch in graduate school. Collaboration with other majors, including those related to materials, equipment and parts, will be expanded.

The incoming government will be lifting regulations regarding the construction and expansion of semiconductor plants and increase incentives for infrastructure investment and R&D.

Simplified government approvals for semiconductor complexes are another area of focus for the new administration.

The central government will be sharing the profits generated from taxes raised through the industrial complexes with the local governments.

Other measures include support for non-memory semiconductor makers and fabless manufacturers.

"Semiconductors are more than a simple product," said Kim Gi-heung, deputy spokesman for Yoon's transition team. "As a national security asset," the era in which companies and countries are teaming up has dawned.

The spokesperson added that while the Yoon administration will provide support to semiconductor companies amid growing competition, the policies will be in line with Yoon's promise that industrial development will be led by the private sector and not centralized by the government.

He said the role of the government is to provide an environment in which the private sector can thrive and develop.

Support under consideration includes expanding tax breaks for semiconductor facility investments.

The Korea Chamber of Commerce and Industry has proposed a significant increase in tax breaks for national strategic technologies, including semiconductors, from the current 6 percent for large companies to 20 percent. For smaller companies, the tax break will be increased from 8 to 25 percent and for SMEs from 16 percent to 30 percent.

"The president-elect has huge interest in semiconductors," said a close aide to Yoon. "Tax breaks need to be agreed upon with related government departments, such as the Finance Ministry. As such, they will likely be pushed after Yoon takes office."

While traveling to Camp Humphreys in Pyeongtaek on April 7 and passing a Samsung Electronics semiconductor plant nearby, Yoon reportedly said "We need to find more high-tech industries like the semiconductors that can secure our future."

BY IM SOUNG-BIN [lee.hojeong@joongang.co.kr]