Bipartisan support for the chip bill needed

The Chip Act of South Korea, or the Semiconductor Industry Competitiveness Strengthening Act, has been unveiled. The law is finally taking form five years after the global chip race took off after the fourth industrial revolution and the U.S.-China trade war. Legislation has been long overdue despite the significance of speed in the chip industry. There is no looking back as there is too much work to be done.

Under the chip promotion act, the government will inject 340 trillion won ($260 billion) into the industry over the next five years primarily to build up the talent, materials, parts and equipment sectors. The act proposes to authorize the National High-Tech Strategic Industry Commission to create chip-focused industrial complexes with exemptions in preliminary feasibility study to fast-track the permission and expands tax incentives to chipmakers.

The chip act will be possible through amendments to the National High-Tech Strategic Industry Act and the Special Taxation Act. The governing People Power Party (PPP) motions the two revisions on Thursday. Yang Hyang-ja — a former Samsung Electronics executive-turned lawmaker and head of a special committee on the chip industry — has proposed the establishment of a bipartisan committee on chips.

Semiconductors have become the pillar to security and industrial ecosystem. Global powers are in a battle to take the chip hegemony. The U.S. has banned export of advanced chip manufacturing equipment to China and expediting a ramp-up in chip capacity on U.S. turf. The House of Representatives followed the Senate in approving the $280 billion CHIPS bill granting 25 percent tax breaks and awarding $51.8 billion subsidies to chip facilities.

The U.S. has asked Korea, Japan and Taiwan to form a Chip 4 alliance within August. Korea is in sticky spot as the alliance can offend China which together with Hong Kong buys 60 percent of Korean chips. Korea at the same time cannot shrug off U.S. invitation, as the country is home to core technologies. Korean enterprises must command unrivalled technology so as not be swayed by the global powers.

But authorities are not doing enough. Taiwan cut off farming waters to ensure sufficient supplies to chip plants. Such promotion has made TSMC a dominant player in the foundry sector. In Korea, Yeoju city has been opposing to water supply and delaying the construction of SK hynix’s chip cluster in Yongin city. Protests were staged against a plan to groom 150,000 engineers through chip-focused tech universities in fear of worsening concentration on the capital region. Rep. Yang said that chips are a gift to Korean prosperity and well-being. To safeguard the gift, the chip promotion bills must be passed to defend the competitiveness of our chip industry.