Samsung Electronics' Hwaseong semiconductor plant in Gyeonggi Province / Courtesy of Samsung Electronics
By Kim Hyun-bin
Korea's high-tech and future industries are lagging behind those of Taiwan, even if its economy is twice as large, due to insufficient policy support and heavy regulations, according to the Federation of Korean Industries (FKI), Monday.
In a report titled "Status and Implications of Taiwan's Industrial Reorganization," it said the Taiwanese government's full support for high-tech and future industries had a significant impact on having more than twice as many semiconductor conglomerates compare to Korea.
According to the report, Taiwan's gross domestic product (GDP) was $789.5 billion last year, a little over half Korea's 1.79 trillion won ($1.3 trillion).
However, Korea lags behind it the number of global semiconductor companies, as Taiwan has TSMC, the world's No. 1 foundry, UMC, the world's third-largest, and MediaTek, the world's fourth-largest in the fabless business.
In addition, the number of semiconductor conglomerates in Taiwan with sales exceeding $1 billion was 28, 2.3 times more than in Korea.
The FKI cited the government's support and deregulation for high-tech and future industries as the key to Taiwan's success. A comparison of the average corporate tax burden of the semiconductor industry over the past three years from 2019 to 2021 by the FKI showed that Korea was at 26.5 percent, 1.9 times higher than Taiwan at 14.1 percent.
By company, the corporate tax burden of major Korean companies exceeded 15 percent with Samsung Electronics slapped with 27 percent, SK hynix at 23.1 percent and LX Semicon 20.1 percent, but in Taiwan, TSMC stood at 10.9 percent, MediaTek 13.0 percent and UMC 6.1 percent.
The FKI explained that Taiwan is also easing regulations and providing incentives in all fields related to future industries, such as human resources, R&D, taxation and reshoring.
Specifically, Taiwan is spurring human resource development by investing around $47.1 million between 2021 and 2025 with the goal of nurturing 2,000 semiconductor experts and opening a semiconductor-related graduate school at the National Taiwan University.
In the R&D field, industrial technology research institutes develop and provide AI-related core technologies to companies, and are implementing a policy of subsidizing 40 percent to 50 percent of the total R&D costs.
As a policy to encourage reshoring, various benefits such as loans and loan interest support are provided to Taiwanese companies that have invested in China for more than two years and are returning to their home countries.
"Taiwan is continuously issuing support policies for future core technology fields. It is essential to interconnect and provide support in detail," professor Kang Joon-young of Hankuk University of Foreign Studies said. "In the case of securing core technical manpower, Taiwan is simultaneously nurturing excellent domestic human resources and attracting key personnel from overseas, and Korea needs to review this."
