Debating profit sharing as rivals race ahead

A forum hosted Tuesday by the Ministry of Employment and Labor under the title “A New Path for Social Innovation in Step with AI Innovation” raises fundamental questions about the priorities of Korean economic policy.

The discussion began with calls to redistribute “excess corporate profits” after Samsung Electronics paid large performance bonuses. Mindful of criticism that it was intervening too deeply in corporate management, the government broadened both the title and scope of the event. Yet the central issue remained how extraordinary profits should be used.

Labor Minister Kim Young-hoon argued that “the astronomical gains generated by AI are part of the total wealth created collectively by our society.” He added that Korea must move beyond a simple dichotomy between investment and redistribution.

The timing of such a debate is questionable, however, when Korea’s major competitors are engaged in an intense race for investment.

The global semiconductor industry is undergoing an unprecedented spending boom. In the United States, Micron is pursuing investments worth $250 billion. Japan has committed 3 trillion yen ($18.5 billion) to Rapidus, a next-generation chipmaker, and is also supporting Micron’s Hiroshima plant with subsidies totaling 536 billion yen as part of its broader effort to revive the country’s semiconductor industry.

China is moving just as aggressively. CXMT recently raised about 29.5 billion yuan ($4.4 billion) through an initial public offering to accelerate the development of next-generation dynamic random-access memory chips and expand production capacity.

It is hardly an exaggeration to say that all of Korea’s major competitors are mobilizing national resources to secure leadership in semiconductors.

Under such circumstances, common sense suggests that corporate profits should first be directed toward productive reinvestment, as Trade, Industry and Energy Minister Kim Jung-kwan has emphasized. Government-led discussions over redistributing excess profits inevitably appear out of step with the times.

At the same time, concerns are growing that the current semiconductor boom may be approaching its peak. If Korea hopes to ensure the success not only of the Pyeongtaek semiconductor complex but also of the planned cluster in the southwest region, policies that expand companies’ capacity to invest and support research and development will be essential.

Labor-market reforms are equally urgent. Rigid regulations on working hours, among other constraints, require rationalization if Korean firms are to remain competitive.

While rival countries are locked in a race to invest, Korea risks becoming consumed by arguments over how to divide extraordinary profits. Under those circumstances, can the country really guarantee that it will preserve its technological edge in semiconductors?

Now is not the time to cut open the goose that lays the golden eggs. It is time to focus government policy on creating an environment in which companies can invest and innovate more boldly.