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ADMIN 2022. 01. 29.  
   제목: Korea asked to offer more tax, R&D benefits for chip industry
Korea asked to offer more tax, R&D benefits for chip industry

December 1, 2021

By Kim Bo-eun

Concern is growing over Korean chipmakers losing their edge at a time when major economies are stepping up support for key industries including semiconductors and batteries for electric vehicles (EVs). The government is urged to speed up provision of necessary support in R&D and investments into production facilities to prevent these firms falling behind major competitors.

This is all the more dire given the competition to gain global hegemony over chips has become a national-level race rather than simply one among semiconductor-making companies.

The U.S. Congress is seeking to pass the "Chips for America Act," legislation providing $52 billion to chipmakers to support semiconductor manufacturing, R&D and supply chains security. The bill offers income tax cuts for chip equipment and manufacturing facility investment through 2026.

The U.S. is boosting support for its own chip makers, after experiencing disruptions in semiconductor supply chains, which depend largely on production by Asian companies, such as Taiwan's TSMC and Korean chipmaker, Samsung. The U.S. has determined increasing its chip manufacturing capacity and capabilities is the only way to mitigate economic and national security-wise risks arising from failing to secure the key component.

The "Chips Act" is set to be one of the largest packages offered by the U.S. government yet. Such market intervention by the No. 1 capitalist state is considered rare.

The U.S. government is not alone in its efforts. Japan has decided to pour 6.3 trillion won into a fund to support chipmakers, in its state budget for next year. More than half of this will be provided to TSMC, which has decided to build a foundry in Kumamoto Prefecture in a joint venture with Sony. The fund will be used to build new production facilities and upgrading existing ones.

China was a late entrant into the global semiconductor market, but its government has invested heavily over the past decades to build competitiveness.

In Korea, lawmakers began discussing a package for the chip, battery and bio sectors in May, but progress has yet to be made. Opposition party lawmakers are contending it is unnecessary to offer excessive tax credits for conglomerates such as Samsung and SK hynix.

"Korea's chipmakers account for 70 percent of the global market for memory chips, but have a long way to go to gain dominance in non-memory chips," Sejong University professor of Business Administration, Kim Dae-jong said. "This is where support for R&D should come in," he said.

"The bill is supposed to be passed by the end of this year. It is crucial that the bill is passed in a timely manner, given the current race is about how much and how swiftly chipmakers invest," Ahn Ki-hyun, senior executive director at the Korea Semiconductor Industry Association, said.

Workers are seen at Samsung Electronics' chip plant in Hwaseong, Gyeonggi Province / Courtesy of Samsung Electronics
SK hynix's Icheon plant in Gyeonggi Province / Courtesy of SK hynix

Samsung, SK facing increasing pressure amid US-China feud

Support for local chip makers is dire, given companies such as Samsung and SK hynix could face disadvantages as the U.S. increasingly seeks to contain China.

The U.S. is known to be lobbying governments and chipmakers to prevent them from taking advanced chip-making equipment into China, amid concerns that the No. 2 economy's growing technological prowess could outpace of competitors.

Concerns have grown since a report stated the U.S. government is seeking to prevent SK hynix from installing extreme ultraviolet lithography (EUV) chip-making machines made by Dutch equipment maker ASML into its plant in China. The U.S. government lobbied the Netherlands years earlier to restrict exports of its EUV equipment to China. The equipment is essential in producing advanced chips.

SK hynix said it is not immediately seeking to place EUV chip-producing equipment into its plant in China, but uncertainties loom given Washington is not likely to change its China-containment stance in the near future.

Regarding the issue, U.S. Trade Representative Katherine Tai during a recent visit to Seoul said on a CBS radio show, "I am aware that the technology in question is highly sensitive, and that there are legitimate concerns about the risks to national security in terms of where this technology ends up. For the U.S., it is important to work with our partners and allies on matters of shared economic and national security."

Washington contends the restrictions imposed on Beijing are a security issue, given the possibility that the latter may use crucial technology for intelligence purposes.

The U.S. government's "request" for key supply chain data from Samsung and SK hynix and other global firms in the industry also generated controversy.

This was largely seen as an attempt by Washington to gain control over the global chip supply chain. Korea's chipmakers have submitted data at their own discretion.

Selected articles from The Korea Times

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