U.S. Shows up Korea's Lack of Investment Strategy thumbnail

U.S. Shows up Korea’s Lack of Investment Strategy

Samsung has announced that it will build a W20 trillion microchip factory in Taylor in the U.S. state of Texas, the biggest investment Samsung has made in America so far (US$1=W1,188). The White House and U.S. Department of Commerce issued statements welcoming the investment. Early this year, President Joe Biden announced plans to thwart China’s ambitions to become a semiconductor powerhouse and bring global chipmakers like Samsung and Taiwan’s TSMC to America. The world’s largest foundry, TSMC, has already announced plans to invest in the U.S. 

But Samsung’s investment is not based solely on political calculations. The U.S. offered a massive carrot to attract it. The Senate passed a radical bill proposing a maximum 40-percent tax cut for businesses that build chip factories in the U.S, which is being discussed by the House of Representatives and is widely expected to pass.

According to the bill, Samsung will benefit from up to W8 trillion in tax cuts should it invest W20 trillion. It will also enjoy another W1.2 trillion in tax cut from Taylor city and Williamson Country. If Samsung built the plant in Korea, it would receive at most W2 trillion in tax benefits. The chipmaker is saving W7.2 trillion just by building the foundry in the U.S., so the choice was a no-brainer. Semiconductors account for 20 percent of Korea’s total exports, but the government does not even have a strategy to keep production here.

The governor of Texas thanked Samsung repeatedly, saying the investment “will have an impact not only in Texas, but around the world.” It is expected to create more than 2,000 high-tech jobs, thousands of indirect jobs and at least 6,500 construction worker positions. The world’s biggest economy has pulled out all the stops to attract businesses and create jobs. In contrast, the Moon Jae-in administration has never tried to convince a foreign business to invest here or a Korean business to keep production at home by offering any incentives. Instead, the president has created a paradise for militant unionists.

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