[NEWS IN FOCUS] K-Chips bills drag as laws elsewhere already provide support

The K-Chips acts, Korea's answer to the U.S. Chips Act, are caught in a political quagmire.

Rep. Yang Hyang-ja, a former Samsung Electronics executive and the main author of the K-Chips bills, holds a report about semiconductors at the National Assembly. [KIM SEONG-RYONG]

The K-Chips acts, Korea's answer to the U.S. Chips Act, are caught in a political quagmire.

One of the bills in the legislative push to support semiconductor companies, which would reduce red tape and subsidize training programs, was finally put up for discussion on Thursday at the National Assembly, 47 days after first being introduced.

Another bill, which would expand tax credits, is still pending.

The government estimates a total of 340 trillion won ($260 billion) will be funneled into the semiconductor industry over the next five years once the bills are passed.

The conservative People Power Party is more supportive of the proposals, while the Democratic Party is taking a more cautious approach.

Political disagreements will make Korea less competitive in the global race for "on-shoring" chip production sites, according to semiconductor industry groups.

"This is a critical moment as the U.S. recently passed an act designed to spur domestic production of chips, which intensifies a chip war among countries," according to a statement jointly released by semiconductor-related associations including the Korea Semiconductor Industry Association and the Korean Society of Semiconductor & Display Technology.

Spearheading the drive is Yang Hyang-ja, a former Samsung Electronics executive-turned lawmaker who is the main author of the two bills. Yang, a former DP member now independent, is serving as head of a special committee on the chip industry.

She called for bipartisan support for the passage of the proposals when she met with President Yoon Suk-yeol last week.

Yoon said semiconductors "determine the fate of the Korean economy," promising support in sync with the aim of the bills.

A flashpoint in the bill under discussion is the central government's increased authority in managing the construction of chip factories at the expense of regional governments.

Chipmakers blame local governments for slowing progress on the building of factories.

Yeoju city is concerned an SK hynix chip complex in Yongin, Gyoenggi, could use too much water and leave farmers short. The dispute delayed the start of the chip cluster construction, initially due to break ground in August.

While Korea struggles to turn the bills into laws, the U.S., EU, and Japan are all aggressively moving to court chipmakers with expanded incentives and tax credits.

The U.S. Chips Act, which was passed in July, commits $52.7 billion for investment into semiconductor research, development, manufacturing and workforce development in the country.

Commerce Secretary Gina Raimondo said in an interview with the Wall Street Journal that the new law contributed to attracting $5 billion investment in Texas from GlobalWafers, a Taiwanese wafer maker that initially considered Germany and Korea.

Japan plans to allocate $5.2 billion to fund chip plants by Taiwan's TSMC.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]