Stop the procrastination on the special chip bill

The DP must join the review and legislation of the new bill.

The governing People Power Party (PPP) is motioning a bill aimed at providing incentives to chipmakers from the investment stage and flexing working hours for research and development (R&D) staff in the chip field. The PPP hopes to pass a bipartisan bill by the end of this month to replace the Korean version of the CHIPS Act, which went down the drain after failing to materialize before the end of the last legislative term in May.

The new PPP-packaged special bill includes a provision which mandates the R&D workforce to be exempted from the universal 52-hour statutory workweek upon an agreement between the labor and management, as defined by the presidential decree. The chip industry has been complaining that R&D activities are constrained by the rigidity in working hours.

The U.S. Fair Labor Standards Act contains the so-called white collar exemption which recognizes that employees with higher paying jobs and duties have less need for statutory wage and hour protections. Weekend and overtime work is frequent for advanced chipmakers like Nvidia and TSMC due to the surging AI-driven demand. Japan also excludes professional workers with high salaries from labor standards. Korean researchers and engineers cannot stay ahead or keep up with their competitors in other countries if they must keep to the strict working hours.

The exemption clause needs to expand to other industries following the chip sector. Given the concerns on how working overtime affects health, compensating guidelines also should be specified.

The new chip bill stipulates the provision of upfront subsidies by local governments to the chipmakers they host — just as U.S. and Japanese local governments provide. So far, our local governments offered indirect incentives such as tax cuts on their investments. But the direct subsidy for large companies can provoke a protest against favoritism toward rich chipmakers. In that case, the subsidy can be used to support materials, parts and equipment makers in the field.

Microchips are essential to drive the AI era. Their performance not only affects the makers but also their hosting countries in the battle for tech supremacy. Korean chipmakers need support amid expectations for heightened trade protectionism during Donald Trump’s second presidency.

Companies should be armed with not just competitiveness but also agility and flexibility. The overload of regulations only helps chain our companies. We cannot expect them to perform their best when they get less help from the government and are hamstrung by droves of regulations.

Some members in the majority Democratic Party (DP) also think that such a special act is needed now. Chip development is a race against time. The DP must join the review and legislation of the new bill.