S. Korea provides zero won in high-tech industry subsidies

The South Korean government has been idle in the global race to foster high-tech strategic industries and survive in the race for technological hegemony. While the U.S., Japan, China, and the European Union (EU) are investing trillions to tens of trillions of won in subsidies for high-tech industries such as semiconductors and secondary batteries, South Korea has not provided a single penny. The South Korean government is almost invisible in the battle of countries fostering high-tech industries.

While South Korea is hesitant to provide subsidies, citing its financial situation, other countries around the world are going all-in to foster their semiconductor industries. The U.S. has enacted the CHIPS Act and allocated 39 billion dollars to subsidize domestic semiconductor production facilities. Last month, the first U.S. company was confirmed to receive the subsidy. Japan has allocated about 18 trillion won, and the EU has allocated 64 trillion won in capital expenditure subsidies. China’s subsidies to semiconductor companies such as SMIC amounted to four trillion won last year alone.

The same is true for the secondary battery sector. The U.S., which has no battery companies, is building a value chain by inducing production in the U.S. with the help of subsidies for electric vehicles based on the Inflation Reduction Act (IRA). The Chinese government has recently expanded its subsidies to include all-solid-state battery R&D. Japan has decided to subsidize Toyota for secondary battery-related R&D. The competitiveness of South Korea’s secondary battery industry, which has been excluded from receiving government support, has faltered. Its global market share has plummeted in the past two years.

The display industry has already seen how quickly other countries can catch up when they expand strategic investments. According to an analysis by the Korea Economic Research Institute (KERI), South Korean LCD products lost their price competitiveness after China designated the display industry as a strategic industry in 2012 and provided large-scale subsidies. Without timely support, it is unclear when South Korea’s OLED industry, which is only marginally ahead, will cede the lead.

As the fall of Intel, the semiconductor empire, has shown, there is no permanent first place in the high-tech industry. In addition, once you lose the competition, it isn't easy to recover. Stable and sustained investment is essential in high-tech industries, which require large-scale infrastructure and disruptive technology development. However, South Korea’s government support is limited to low-interest loans and tax incentives, and support bills are stalled in the National Assembly. There needs to be a sense of crisis that losing the lead in high-tech industries threatens not only the economy but also security. The government should say that high-tech industries are the country's lifeblood and show it in action.