(Bloomberg) — During three decades at Samsung Electronics Co. Yang Hyang-ja helped shape the 84-year-old conglomerate’s current dominance in the global memory chip industry. Now, it faces a much broader challenge: ensuring Korea remains relevant while the United States and China fight over semiconductors.
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Yang, who rose from a research assistant at the storied company before heading up the main memory chip development division, is the chief architect of a national effort to fund and stimulate the domestic chip industry. Its mission is growing more important as the United States, China and Japan pour billions into building their chip supply chains, blocking Korea’s future role in semiconductors, she told Bloomberg Television.
It’s a matter of national security, she said, echoing the views of those in Washington and Beijing who direct talent, money and policy support into developing silicon chips that underpin future technologies of artificial intelligence and next generation. Computing – particularly military capability.
“We are in a chip war,” Yang said in an interview in December. “Technological superiority is a means by which our country can take the lead in any security-related agenda, such as diplomatic and defense issues, without being influenced by other countries.”
Yang, who leads a 13-member special committee of Chairman Yoon Suk Yul’s ruling party this year to brainstorm a solution, argued that only through forceful and direct intervention could Seoul expand its position in the $550 billion global semiconductor industry. It is one of a growing number of global policymakers to embrace tech protectionism after the pandemic-driven logistics highlighted countries’ dependence on one another for key electronic components. It won over an ally in Yoon, who joined Yang’s calls for more policies to help the country’s domestic chip sector, which includes SK Hynix Inc. So is Samsung.
Perhaps her efforts are bearing fruit. Last month, the parliament passed the Korean version of the US chip law. The move, led by Yang, is speeding up the approval process for building factories in the capital region, while increasing the number of schools specializing in technology. Separately, parliament passed a preliminary bill offering an 8% tax credit to large companies that invest in semiconductor manufacturing, much smaller than Yang’s proposal of 20% to 25%.
Such gestures are a far cry from the billions of dollars in subsidies that other countries are committing to chip production, Yang said, adding that fellow lawmakers in the National Assembly are blinded by short-term political interests. Some of her peers, in contrast, argued that overly generous incentives threatened government finances and would only benefit large corporations.
On Tuesday, the Finance Ministry announced a plan to increase the tax exemption on capital expenditures for large companies to as much as 25%. It is unusual for an administration to propose substantive changes so soon after lawmakers pass a bill.
Unless the government lifts its incentives, Yang said, more Korean companies can move their key production facilities to the United States, taking their best engineers with them. Samsung plans to build a $17 billion semiconductor plant in Texas, and has floated the possibility of spending nearly $200 billion on a series of plants in Austin and Taylor.
Yang said Korea has a unique opportunity to counter this trend. Taiwan – where Taiwan Semiconductor Manufacturing Co. Depends – produces the majority of the leading chips that power the latest iPhones, servers, and supercomputers. That has prompted calls around the world to diversify production away from an island that China claims it has threatened to invade.
“Samsung is the only company in the world that can fill in for TSMC,” Yang said.
Yang, who first joined politics in 2016 at the encouragement of former President Moon Jae-in, is an independent lawmaker who left the Democratic Party in 2021 amid criticism over her response to a sexual assault case against one of her aides, who was also a member of parliament. relatively. Yang later apologized. Police investigations did not result in any charges against the deputy.
Chip politics is taking its time now. Mounting sanctions on advanced technology are putting increasing pressure on the country to choose between the United States, its security ally, and China, its largest trading partner. Both asked South Korea to expand chip production partnerships.
But Seoul avoided outright comments regarding its compliance with the Biden administration’s sanctions on US-related knowledge exports to China.
Yang said this delicate stance highlights the need for Korea to build up its domestic technological capabilities — or risk increasing its subservience to foreign powers.
Yang said this is the right time to provide more incentives for Korean companies to build production capacity at home, rather than abroad. She said the country needs to do more to keep young talent.
“Otherwise, how can our country survive?” She said. “It has become a new technological colony.”
– With assistance from Emily Yamamoto.
(Updates with details about Korea’s revised chip bill)
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