The Bank of Korea (BOK) announced Thursday that South Korea’s economy grew by 1.3 percent in the first quarter from the previous quarter.

The growth is attributed to strong chip exports.

Korean chipmaker SK hynix Inc. on Thursday disclosed that its first-quarter operating profit stood at 2.9 trillion won, beating market forecast, on sales of 12.4 trillion won, a record figure for the cited quarter.

The Korean government should spare no effort to keep the momentum going.

It is the first GDP growth of over 1 percent since 1.4 percent expansion in the fourth quarter of 2021.

The growth has been propelled by increased construction investment and exports.

Outbound shipments of chips and handset devices gained 0.9 percent in the first quarter, alongside a rise in private and government spending.

Chip companies, in particular, such as SK hynix, are stimulating domestic economic growth.

SK hynix has committed to investing 20 trillion won in building a new fab in Cheongju, North Chungcheong Province, to fortify its position in the high-bandwidth memory (HBM) chip market.

However, the construction has been delayed for two years as construction of the Yongin semiconductor cluster struggles to deal with local residents‘ complaints and other regulatory issues.

The government and policymakers should be active in addressing the issues.

The government should also recognize and support semiconductor manufacturers that have made substantial investments in the domestic industry.

Unlike other major players such as the United States, Japan, and the European Union, Korea offers only a 15 percent deduction on capital investment from taxes paid by companies without substantial subsidies for semiconductor facility construction.

The limited support stands in stark contrast to the substantial subsidies provided by the U.S., which even includes broader support to companies such as Taiwan’s TSMC and Samsung Electronics.

Given that semiconductors account for 20 percent of the country’s exports and play a pivotal role in job creation, Korea cannot afford to overlook the urgent need to enhance its support for the chip industry.

It is time for Korea to reaffirm its commitment to becoming a global leader in semiconductor technology.

By Editorial Team

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