(EDITORIAL from Korea Times on April 10)

Chip exports rally Samsung should get maximum grants from US In recent months, the nation has been swept up by heated election campaigns, temporarily setting aside pressing issues. As the polls close today, it is time to refocus our attention on addressing the needs voiced by the electorate. At the core of their demand is revitalizing the lackluster Korean economy. Last week, a glimmer of what could be described as springtime emerged for Korea's tech titan, Samsung Electronics. In a preliminary earnings report, the company revealed its anticipation of a first-quarter operating profit of 6.6 trillion won ($4.9 billion), marking a staggering 931.2 percent increase compared to the same period last year. While specific figures for individual business units weren't disclosed, analysts predict that the world's biggest memory chipmaker marked a turnaround in earnings after four quarters of losses. The turnaround can be attributed to the surging global demand for artificial intelligence, coupled with the elevat ed prices of DRAM and NAND flash memory chips due to reduced production. Market observers are cautiously predicting a full-fledged rebound for the sector, which began declining in the third quarter of 2022 but has gradually been recovering since late 2023. Caution should prevail over hope in this case, given the uncertainties surrounding global competition involving governments, evolving technology, and economic indicators. The small rebound is good news nevertheless as semiconductor exports make up about 20 percent of Korea's outbound shipments. Accordingly, exports in March climbed 3.1 percent year-on-year to $56.5 billion. During this rebound, Samsung, along with another major Korean chipmaker, SK hynix, must prioritize expanding their presence in the advanced chip market. The endeavors of these two prominent chipmakers may prove insufficient. That is why the government needs to do its part. Fortunately, President Yoon Suk Yeol pledged on Tuesday to elevate Korea's status to one of the top three nations in artificial intelligence technology. Additionally, the government will explore avenues to enhance investment incentives. This recent commitment offers a clear direction in the aftermath of his reiterated promises to assist Korean firms in "winning" the chip war. A leader in memory chips, Korea has been standing on its toes, vigilant and at times vulnerable, as the United States and the European Union provide subsidies to their chipmakers to stay ahead of the technological competition with China. Last month, U.S. President Joe Biden unveiled that Intel would receive a $19.5 billion grant, which is the largest federal investment since the enactment of the 2022 CHIPS and Science Act. Japan has allocated a 4 trillion yen budget ($26.4 billion) to support its chip industry. Both the European Union and China have launched their respective semiconductor projects. The Dutch government is reportedly in talks with the country's largest company, the semiconductor equipment maker ASML, so that the company does not mo ve to another country or expand abroad, which the Dutch newspaper De Telegraaf reported as "Operation Beethoven." On Tuesday, the president reaffirmed the government's commitment to ensuring the success of a planned chip cluster in Yongin, Gyeonggi Province. Stringent regulations and an aversion to big businesses have hindered progress in the construction of the cluster, significantly lagging behind the pace set by the Taiwan Semiconductor Company's (TSMC) factory in Kumamoto, Japan, which was completed in less than two years. There are no grants or subsidies available. However, semiconductor investments are exempt from a 15 percent tax, serving as the sole incentive. In contrast, the U.S. government on Monday announced $11.6 billion in grants and loans to TSMC for investments in plants in Arizona. Meanwhile, Samsung is waiting for a grant decision from the same U.S. CHIPS Act. Reports say that Samsung will receive more than $6 billion in grants. We believe Samsung should get the maximum amount of subsidies in consideration of the alliance between the two countries and the Korean chipmaker's increasing investments in the U.S. We welcome the belated move by the Yoon administration to revisit its current policy and look for innovative ways to expand tax and financial benefits to the semiconductor sector. The race for global semiconductor dominance is now intensifying in earnest. Source: Yonhap News Agency