South Korean lawmakers proposed subsidies, allowance for more overtime in anticipation of China slashing chip prices in a way that will edge out Korean rivals.The bill was proposed by South Korea’s ruling party and needs approval from the opposition party to pass.
In addition to subsidies, it proposes an exemption to the nation’s labor law that prohibits more than 12 hours of overtime per week. Samsung’s labor union, which went on strike for the first time earlier this year, has opposed increasing the 52-hour working week cap.
Korean Chip ‘Crisis’
Last month, Samsung reported disappointing third-quarter profits, citing delays in its artificial intelligence (AI) chip business and competition from Chinese rivals in conventional chips.
Samsung’s stock has dropped by more than 20 percent this year, and in May, the company replaced the head of its semiconductor division to boost competitiveness, citing a “chip crisis.”
The company is seen as lagging behind other Asian chipmakers such as Taiwan’s TSMC and South Korea’s SK Hynix.
On May 23, South Korea’s president announced a $19 billion support plan for the domestic chip industry that included tax cuts and various fund programs.
“As you all know, semiconductors are a field of national all-out war,” Yoon said.
“Winning or losing depends on who makes the state-of-the-art semiconductors with high information processing capabilities first. The state must provide support for semiconductors so that they do not lag behind competitors.”
Yoon noted that South Korea’s market share in the chips industry, not including manufacturing, was in the 1 percent range, and “foundry, which manufactures system semiconductors, is unable to close the gap with leading companies such as TSMC.”
Southeast Asia Boon?
The industry is bracing for new China restrictions, and Southeast Asian countries expect some chip companies to move from China.
One of Thailand’s largest industrial estate developers, WHA Group, has added Chinese speakers to its sales force in anticipation of Chinese factories moving to Southeast Asia to avoid Trump tariffs.
“This round is going to be more intense” than in Trump’s first term, said WHA Group CEO Jareeporn Jarukornsakul.
Amata Corp’s founder, Vikrom Kromadit, said that, already, two-thirds of the 90 companies opening in the Thai industrial park developer’s sites are relocating from China.
Thai Commerce Minister Pichai Naripthaphan framed the situation as a boon in which Thailand would not need to choose between the United States or China, anticipating high investment from Chinese companies that will manufacture in Thailand and sell to the United States.
Soh Thian Lai, president of the Federation of Malaysian Manufacturers, also anticipates Chinese companies relocating to Malaysia, especially in the semiconductor industry.
U.S. officials and lawmakers have criticized China for its unfair trade practices, particularly in the semiconductor industry, where concerns are heightened due to national security issues.