Minister of Trade, Industry and Energy Lee Chang-yang, fourth from left, and key executives of local chip manufacturers pose after signing a memorandum of understanding to foster semiconductor experts at Dongjin Semichem in Hwaseong, Gyeonggi Province, Thursday. Yonhap

Gov't to draw $259 billion investment over 5 years, nurture 150,000 experts

By Lee Kyung-min

The government will increase tax incentives and push for deregulations on Korean chipmakers to stimulate investments and turn the country into a global "semiconductor superpower," according to related ministries, Thursday.

It also plans to join hands with chip manufacturers to set up an academic organization this year to train and educate over 150,000 semiconductor experts over the next decade.

These are part of measures unveiled by related ministries to foster the chip industry, hobbled by heavy taxes, regulations and a shortage of highly-skilled experts. The industry, finance, labor, infrastructure, environment, science and education ministries jointly announced the plan.

In a meeting with heads of local chip makers, Minister of Trade, Industry and Energy Lee Chang-yang said the government will closely communicate with the semiconductor industry and continue to provide assistance as needed.

"Korea's competitive industrial edge will be fortified through cooperation among promising new players in the businesses of batteries, displays, future mobility, robots and biopharmaceuticals," he said. "Government policy measures will be outlined accordingly."

Under the plan, major Korean firms, including Samsung Electronics and SK hynix, will invest a combined 340 trillion won ($259 billion) over the next five years.

A 300 billion won public-private fund will be set up to create a semiconductor ecosystem to promote innovations by small market players and to use as capital for mergers and acquisitions (M&A) next year.

The market share of logic chips will be increased to 10 percent by 2030, up from the current 3 percent. The country's dependency on import for key materials, parts and equipment will be lowered to 50 percent from the current 70 percent.

Then President-elect Yoon Suk-yeol holds a semiconductor wafer at Korea Advanced Institute of Science and Technology (KAIST) in Daejeon, April 29. Korea Times file

Facility investment and tax credit

The government will build facilities in Yongin, Gyeonggi Province to supply water and electricity to chipmakers and simplify the approval process for setting up industrial facilities. Regulations will be eased to house more buildings in expanded areas, as long as the plan does not pose a grave harm to the public.

Tax benefits for corporate facility investments will be raised to between 8 and 12 percent, up 2 percentage points. The eased measures will grant large conglomerates, including Samsung Electronics and SK hynix, the same level of tax benefit as their mid-sized peers.

The scope of key chipmaking technologies eligible for tax benefits will be expanded to include testing equipment, intellectual property (IP) design and verification. So far, tax benefits are mostly granted to equipment needed for high-tech manufacturing.

The existing 52-hour workweek limit will be loosened to 64 hours a week from Sept. 1.

The government will set up a law whereby semiconductor equipment that obtained certifications from international organizations will be exempt from lengthy local inspection and approval processes.

A 350 billion won fund raised by public-private cooperation will be use to offer masters and doctorate courses to students.

The government will also consider granting 50 percent income tax reductions for up to 10 years to firms that hired talented semiconductor experts from overseas. Currently the reduction period is limited to five years.

Also, 30 local fabless firms will be provided with a government grant of 1.5 trillion won to invest in technology development and overseas expansion.