Biz: The Sad
Reality of Korean Semiconductor company, Begging for Government Handouts
10 July, 2024
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| Ahnjae Lee, Vice President, Samsung Global Research |
The cozy relationship between South Korea's chaebols and the government is a festering swamp of corruption, oiled by illegal subsidies and kickbacks to politicians. Nowadays, these pampered conglomerates don't hesitate to cry to the government when their ventures go belly up due to their own ineptitude. This filthy symbiosis between the chaebol and the government is so deeply entrenched it seems only an external force could ever hope to break it.
Once again, the United States, the European Union (EU), and Japan are surging ahead in advanced semiconductor production, while Korea’s share is set to plummet from 31% to a pitiful 9%.
This dire
prediction comes from Samsung Global Research Vice President Ahn Jae Lee, who
graced the 'K-Semiconductor Transformation' debate at the National Assembly
Hall with his doom-and-gloom forecast.
As AI
technology propels the semiconductor industry into a golden age globally, Lee
laments the supposedly harsh business environment in Korea, pleading for
political intervention to save the day.
Lee
couldn't stress enough how the US, Japan, and the EU are pulling out all the
stops to boost their semiconductor sectors.
"The
US is rolling out the red carpet with hefty subsidies, tax credits, and
infrastructure support. Companies can rake in subsidies up to 15%, and
government loans are there for the taking. Japan’s pampering its semiconductor
giants with robust support, and the EU is prioritizing semiconductor production
to keep its key industries like automotive thriving," Lee said.
"Germany
is throwing money at it, subsidizing between 33% and 50%. Intel’s fab got 33%,
and TSMC bagged half. Municipalities are building infrastructure like water and
roads. The actual incentives are even juicier when you tally them up."
"Meanwhile,
Taiwan treats TSMC like a sacred cow, showering it with support. Their main
focus is on tax credits, infrastructure, and strengthening the semiconductor
industry base, rather than direct subsidies."
Yet, South
Korea is lagging behind, with its support for the semiconductor industry
trailing other nations.
"In
Korea, companies foot most of the bill for infrastructure like power and water,
and they even have to handle the headaches of civil conflicts. No wonder
production is such a struggle," he moaned.
"The
government needs to step up, build adequate infrastructure, and keep power and
water costs competitive," he declared.
And as if
that wasn't enough, Lee pointed out how other countries treat technology leaks
as grave offenses, with hefty penalties to boot. "The US dishes out up to
20 years in prison for tech breaches, with the potential for up to 33 years and
9 months depending on the damage."
"South
Korea, on the other hand, has laughably lenient penalties, with sentences
ranging from one to three and a half years, and in 2021, a whopping 87% of tech
breach offenders got off with probation or were acquitted."
Lee warned
of a grim future if South Korea doesn’t up its game. "According to a joint
analysis by the Semiconductor Industry Association (SIA) and The Boston
Consulting Group (BCG), by 2032, the global share of advanced semiconductor
production below 10 nanometers will skyrocket to 28% in the US, 6% in the EU,
and 5% in Japan, while South Korea’s share will nosedive from 31% to 9%."
"The
lack of government support is the likely culprit, and without it, South Korea
can kiss its status as a global semiconductor powerhouse goodbye."