The semiconductor boom has set the stage for record-breaking bonus payouts at major conglomerates. National tax revenue in the first half of this year is projected to rise 33 trillion won ($23.5 billion), or 17.4 percent, from a year earlier. Beyond semiconductors, power equipment and HVAC companies have also seen their earnings swell.
Much of this windfall traces back to aggressive AI data center investment by US hyperscalers locked in a race for AI dominance. The enormous spoils have drawn the attention of every corporate stakeholder group, with employees and government ministries each making little secret of their competing calculations.
Left out of this feast, however, are the dozens to thousands of small and medium-sized materials, parts and equipment suppliers embedded in semiconductor, robotics and power supply chains. When excess profits materialize, executives and employees at large conglomerates collect performance bonuses, the government enjoys a surge in tax revenue, shareholders receive higher dividends, and local communities and consumers see some benefit as well.
The contribution of supplier firms deserves recognition too. They operate in ordinary commercial relationships with parent companies — receiving payment in exchange for goods — but those relationships are sustained over long periods, creating a special interdependence. That sustained tie gives rise to a legitimate claim to compensation beyond the contract price, tied to the parent company's excess profits.
Global competition is no longer a contest between individual firms; it has become a contest between supply chains and ecosystems. The outcome of the coming AI revolution will be decided not by one or two large conglomerates but by the quality of the ecosystem as a whole.
The government's three mega-projects — 800 trillion won for semiconductors, 550 trillion won for data centers and more — have signaled over 1,500 trillion won in investment over the next decade. Yet semiconductors, physical AI and data centers are not isolated islands. That investment can translate into productivity and competitiveness only when materials, parts and equipment suppliers, along with power equipment, cooling systems, robot sensor and software companies, are connected through evenly developed capabilities.
Sustaining the gains of the AI revolution as broad-based national economic growth for future generations will require the trickle-down effect of large conglomerates' performance to actually reach the wider ecosystem. The problem is that trickle-down is slow, and channels must be actively opened.
For the time being, distributing large conglomerates' excess profits to contributors within the related ecosystem is not straightforward. Collective resistance from shareholders and employees is to be expected.
At a minimum, excess tax revenue could be put to meaningful use as "patient capital" — directed at materials, parts and equipment firms in semiconductors, AI and robotics, particularly technology-focused small and medium-sized enterprises. Such suppliers must commit enormous capital to research and development, equipment and personnel well before orders arrive from large conglomerates. That leaves them chronically strained in terms of capital strength, liquidity and creditworthiness.
Loan delinquency rates offer a telling indicator of this strain. As of the end of May this year, the delinquency rate on commercial bank loans to small and medium-sized enterprises stood at 1.00 percent, the highest in 11 years — nearly four times the 0.27 percent rate for large-company loans. Financial institutions can be expected to tighten their risk management further in response.
A promising mechanism exists for channeling patient capital to technology firms: policy guarantees. Unlike direct subsidies, policy guarantees strengthen a company's creditworthiness to attract private funding. Institutions such as the Korea Technology Finance Corp., the Korea Credit Guarantee Fund and regional credit guarantee foundations play exactly this role.
When excess tax revenue flows to policy guarantee institutions, their funds are reinforced. Excess profits from large conglomerates could also be channeled into those funds in the form of donations. Policy guarantees are generally analyzed to carry a multiplier effect of close to tenfold.
"When assessments focus primarily on financial condition, technology firms have very few options for improving their liquidity," a venture industry official said. "Evaluating technological and business viability as the basis for guarantees is a realistic way to build patient capital and let the trickle-down effect of excess profits reach supplier firms as well."
freiheit@heraldcorp.com
