For South Korea, the export of semiconductor components is an important source of income, which is why the country’s authorities are trying to maneuver between difficult market conditions and ever-changing requirements from the USA. Korean companies vying for US subsidies to expand their businesses risk serious uncertainty, officials say.
With his thoughts on the subject, as reported by Bloomberg, South Korea’s Minister of Commerce, Industry and Energy Lee Chang Yang announced on the previous day. Assessing the impact of the United States’ passage of the so-called “Chip Act,” which would provide $52 billion in subsidies for building chip-making companies in the country, a South Korean official cited at least three reasons for concern among the public Korean companies applying for these subsidies.
For example, subsidy recipients are denied the right to invest in expanding their production facilities in countries hostile to the US, and Samsung and SK hynix have large manufacturing complexes for the production of memory chips in China. And if SK hynix’s activities aren’t particularly constrained by those rules, then Samsung Electronics is building a second custom chip manufacturing company in Texas, and the project’s $17 billion cost is said to be at least partially covered by subsidies from US authorities . Among other things, recipients of state support cannot buy back their own shares from budgetary funds, they must also organize daytime childcare for employees of new companies or compensate for core expenses at the expense of the employer.
However, according to Minister Li, the main obstacle to participation in the subsidy program is the uncertainty about the outcome of relevant initiatives. Korean companies will have to spend a lot of time and effort to meet the United States’ requirements, and it is not certain that these costs will ultimately pay off. Another problem is the need to disclose additional information about company management’s activities, not to mention the difficulty of investing in the US economy amid rising interest rates and inflation.
The South Korean government stands ready to work with its US counterparts to address many of these uncertainties and remove undue regulatory burdens on Korean companies willing to expand their businesses in the US. The participation of representatives of the companies themselves makes sense, as the Korean minister added. Along the way, the country’s authorities will develop their own programs to support the national semiconductor industry.