Amid the global economic downturn and supply chain restructuring, discussions are actively taking place on how to strengthen the competitiveness of domestic cutting-edge industries and how to respond. Industrial and scientific technology capabilities are repeatedly emphasized as a means to overcome the crisis, and voices of criticism are heard.

The Federation of Korean Industries (FKI) held a discussion on the ‘Semiconductor and Inflation Reduction Act (IRA) and the Restructuring of the US Supply Chain and Korea’s Response’ at the FKI Conference Center on the 28th. This meeting was organized to diagnose Korea's situation and seek related countermeasures amid the reorganization of the supply chain of advanced industries in the U.S., such as the Chip 4 Alliance, the Semiconductor Support Act, and the IRA.

In his opening remarks, Kwon Tae-shin, Vice Chairman of the Federation of Korean Industries, said, “In supply chain strategies, the importance of resilience is increasing rather than efficiency,” adding, “At a time when securing a domestic-centered network for electric vehicles and key minerals and keeping competitors in check are fierce, we need to find short-term survival strategies such as strengthening domestic price competitiveness and preparing long-term survival strategies such as securing raw materials.”

■Technology is diplomacy, defense, and security

On this day, Yang Hyang-ja, Chairwoman of the People Power Party's Special Committee for Reinforcing Competitiveness in the Semiconductor Industry, gave a keynote speech on the topic of 'US Supply Chain Restructuring Strategy and Korea's Tasks.'

Rep. Yang Hyang-ja emphasized, “Future technology and industry are the sacred weapons and sacred mountains of the nation, and science and technology are diplomacy, national defense, and security.” He suggested, “Since we cannot exclude the United States from semiconductors, the Chip 4 Alliance is inevitable, and we should have a strategic alliance with the United States, but maintain a cooperative and symbiotic relationship with China.”

Rep. Yang interpreted this as an intention for the U.S. to catch up with China by leading the supply chain reorganization, while also pursuing Korea in the memory sector and TSMC in the system semiconductor sector, stating, “Science and industrial technology are diplomatic power and negotiating power.”

He expressed regret over the government's policy formulation and operation, saying that although the global industrial landscape is changing rapidly, there are shortcomings. It was pointed out that the government needs to establish a control tower and focus on this, as each ministry, including the Ministry of SMEs and Startups, the Ministry of Science and ICT, and the Ministry of Trade, Industry and Energy, is dispersing its limited budget by pouring out individual policy responses to the supply chain and advanced industry sectors.
In addition, while the National Advanced Strategic Industry Act amendment bill has been submitted to the Ministry of Trade, Industry and Energy, the Tax Special Exceptions and Restrictions Act amendment bill is still pending. Some have expressed reluctance to support large corporations with such support for advanced industries and tax special provisions.

In response, Rep. Yang said, “The public and policymakers need to change their perceptions,” and “The Ministry of Strategy and Finance is concerned about the tax revenue reduction due to the Special Tax Exceptions and Restrictions Act, but is not considering the increased tax revenue that will come from the expansion of the domestic semiconductor industry.” The industry said that small and medium-sized companies in the semiconductor industry are hoping for more support from large companies, and it is expected that domestic vendors and small and medium-sized companies will benefit one after another as their market share increases.

Meanwhile, experts unanimously agreed that it would be difficult to file a complaint by pointing out violations of WTO and FTA provisions as a solution to the IRA Act. In response, Rep. Yang suggested that “targeting the U.S. State Department and the Office of the Trade Representative would be effective,” and said, “In order for the Yoon administration to have diplomatic negotiation cards, it is necessary to clearly understand the level of domestic technological prowess on the world stage.”