A series of tariff policies that Trump may implement after taking office may intensify market risks in many countries around the world and weaken the strength of semiconductor companies. Taking South Korea as an example, South Korean President Yin Xiyue said last week that Trump's series of policies may weaken the strength of South Korean chip companies.
In order to try to avoid such risks, South Korea's ruling party proposed a "Special Semiconductor Law" on Monday, which will provide subsidies to chip manufacturers. It also plans to add a "white-collar exemption" clause to the bill, aiming to relax South Korea's strict 52-hour weekly working time limit for high-paying management and professional roles in the industry. Working hours in excess of 52 hours per week are allowed on the basis of mutual agreement.
Regarding the importance of upfront subsidies, some congressmen said: "The government usually provides support in the form of investment tax credits, but tax credits are only available when investment, factory completion, employment of employees and operating profits are made. From a company's perspective, like in the United States, receiving upfront subsidies during the investment confirmation stage is an incentive, so our goal is to establish such a legal basis."
In addition to subsidies, the above-mentioned bill also contains supplements regarding maximum working hours. Some employees involved in research and development will be allowed to work longer hours, exempting them from the labor law's limit of up to 52 hours per week.
South Korea’s 52-hour work week law enacted in 2018 limits the maximum working week to 52 hours. Although it is intended to improve work-life balance, South Korea believes that the regulation may hinder productivity and competitiveness. Countries such as the United States and Japan have fewer restrictions on the working hours of R&D personnel, so the proposed legal exception reflects the need to adapt to global competition.
According to Korean media reports, Samsung and SK Hynix invested US$21 billion and US$3.1 billion respectively in research and development last year. However, these companies still face human resource challenges in the actual R&D process, as well-paid R&D personnel are subject to a 52-hour work week limit.
In comparison, the operating model of TSMC, the leading wafer foundry, in Taiwan appears to be more flexible. Although Taiwan also has a 40-hour weekly working hour limit, working hours can be extended from 8 hours to 12 hours a day as long as labor and management reach a consensus through negotiation.
Companies such as NVIDIA and Apple in the United States also enjoy similar flexibility. NVIDIA does not have "early morning overtime" or "weekend overtime" restrictions, while Apple's iPhone development team can also work intensively within one year and six months in the early stage of development depending on the research and development stage, and the later product verification stage is relatively easy. This is due to the white-collar exemption system set up in the United States for high-paying positions with an annual salary of more than $107,432, which is not subject to the 40-hour work system. In addition, Japan also exempts professionals with an annual income of 10.75 million yen or more from working hour regulations.
People in the Korean semiconductor industry generally believe that a company's competitiveness lies in product and technology innovation, and these innovations require sufficient research and development time and the flexible use of human resources.